APS 2013 Annual Report Download - page 144

Table of Contents
PINNACLE WEST CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted Stock Unit Awards and Stock Grants
Stock grants issued to non-officer members of the Board of Directors in 2013, 2012 and 2011, provided the members of the Board of Directors the
option to elect to receive a stock grant, or to defer receipt until a later date and receive restricted stock units in lieu of the stock grant. The members of the
Board of Directors who elect to defer may elect to receive payment in either stock, or 50% in cash and 50% in stock. The members of the Board of Directors
may elect to receive payments either as of the last business day of the month following the month in which they separate from service on the Board of
Directors, or as of a specified date, which must be after December 31 of the year in which the grant was received. The deferred restricted stock units accrue
dividend rights, equal to the amount of dividends the Directors would have received had they directly owned stock equal to the number of vested restricted
stock units from the date of grant to the date of payment plus interest compounded quarterly. The dividends and interest are paid, based on the Director’s
election, in either stock, or 50% in cash and 50% in stock.
Restricted stock units have been granted to officers and key employees in each year since 2007. From 2007 through 2009, officers and key
employees elected to receive payment in either cash or in fully transferable shares of stock, in exchange for each restricted stock unit on pre-established
valuation dates. From 2010 through 2013, officers and key employees elected to receive payment in either stock, or 50% in cash and 50% in stock.
Restricted stock unit awards vest and settle over a four-year period. In addition, officers and key employees accrue dividend rights on vested
restricted stock units, equal to the amount of dividends that they would have received had they directly owned stock, equal to the number of vested restricted
stock units from the date of grant to the date of payment plus interest compounded quarterly. The dividends and interest for the 2007 through 2009 awards
are paid in cash. The dividends and interest for the 2010 through 2013 awards are paid in the same form as the restricted stock unit payment election.
Restricted stock unit awards are accounted for as a liability award, with compensation cost initially calculated on the date of grant using the Company’s
closing stock price, and remeasured at each balance sheet date. Compensation expense for retirement eligible participants is recognized immediately.
In December 2012, the Company granted a retention award of 50,617 restricted stock units to the Chairman of the Board, President, and Chief
Executive Officer of Pinnacle West. The award will vest and will be paid in shares of common stock on December 31, 2016, provided that he remains
employed with the Company until the vesting date. The award will accrue notional dividends equal to the amount of dividends that would have been received
if the Chairman of the Board, President and Chief Executive Officer had directly owned one share of Pinnacle West common stock for each restricted stock
unit held from the grant date to each dividend payment date. The award can be increased up to an additional 33,745 restricted stock units payable in stock if
certain performance requirements are met.
A grant of restricted stock unit awards was made to officers of the company on February 15, 2011, payable solely in shares of common stock upon
the officer’s retirement or other separation of employment. This award vested 50% on February 15, 2013. The remaining grant will vest 25% on
February 15, 2014 and 25% on February 15, 2015, provided that the officer remains employed on such date. The officers will also accrue notional
dividends equal to the amount of dividends that they would have received if they had directly owned one share of Pinnacle West common stock for each
restricted stock unit held from the grant date to each dividend payment date. Each additional restricted stock unit
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