Exhibit 10.2
RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
PINNACLE WEST CAPITAL CORPORATION
2007 LONG-TERM INCENTIVE PLAN
THIS AWARD AGREEMENT is made and entered into as of                     , 2010
(the “Date of Grant”), by and between Pinnacle West Capital Corporation (the
“Company”), and                                           (“Employee”).
BACKGROUND

  A.   The Board of Directors of the Company (the “Board of Directors”) has
adopted, and the Company’s shareholders have approved, the Pinnacle West Capital
Corporation 2007 Long-Term Incentive Plan (the “Plan”), pursuant to which
Restricted Stock Units and Dividend Equivalents may be granted to employees of
the Company and its Subsidiaries and certain other individuals.

  B.   The Company desires to grant to Employee Restricted Stock Units and
Dividend Equivalents under the terms of the Plan.

  C.   Pursuant to the Plan, the Company and Employee agree as follows:

AGREEMENT

  1.   Grant of Award. Pursuant to action of the Committee which was taken on
the Date of Grant, the Company grants to Employee  _____  (x,xxx) Restricted
Stock Units and Dividend Equivalents based on the dividends declared on the
shares of Stock to which such Restricted Stock Units relate.

  2.   Award Subject to Plan. This Restricted Stock Unit Award and the related
Dividend Equivalent Award are granted under and are expressly subject to all of
the terms and provisions of the Plan, which terms are incorporated herein by
reference, and this Award Agreement.

  3.   Vesting of Restricted Stock Units. The Restricted Stock Units granted
hereunder will vest and no longer be subject to the restrictions of and
forfeiture under this Award Agreement on four “Vesting Dates” as follows:

  (a)   x,xxx Restricted Stock Units will vest on February 20, 2011;

  (b)   x,xxx Restricted Stock Units will vest on February 20, 2012;

  (c)   x,xxx Restricted Stock Units will vest on February 20, 2013; and

  (d)   The remaining x,xxx Restricted Stock Units will vest on February 20,
2014.

In addition, the Restricted Stock Units will fully vest and no longer be subject
to the restrictions of and forfeiture under this Award Agreement upon Employee’s
Retirement. For purposes of this Award Agreement, “Retirement” means a
termination of employment which constitutes an “Early Retirement” or a “Normal
Retirement” under the Pinnacle West Capital Corporation Retirement Plan.
For avoidance of doubt, no acceleration of vesting of the Restricted Stock Units
will occur on a Change of Control of the Company.

 

 

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  4.   Payment.

  (a)   Time and Form of Payment. Subject to the provisions of this Award
Agreement and the Plan, when a Restricted Stock Unit vests on one of the Vesting
Dates set forth in clauses (a), (b), (c) or (d) of Section 3 above, Employee
shall receive in exchange for each Restricted Stock Unit one unrestricted fully
transferrable share of Stock. Employee may elect, pursuant to Section 4(b), to
receive payment for the Restricted Stock Units payable on any Vesting Date in
the form of 50% cash and 50% in unrestricted fully transferrable shares of
Stock. If the allocation between cash and Stock results in a fractional share,
the Stock will be increased to provide for the issuance of a full share of Stock
and the cash will be reduced accordingly. If a Restricted Stock Unit vests prior
to the applicable Vesting Date due to Employee’s Retirement, the transfer or
payment will be deferred until the applicable Vesting Date. Any cash payment
will be based on the Fair Market Value of one share of Stock determined as of
the Vesting Date on which the Restricted Stock Unit vests. The transfer or
payment shall be made within 90 days of the applicable Vesting Date.

  (b)   Election of Form of Payment. Within  _____  days after the Date of
Grant, Employee must elect to receive payment for Employee’s vested Restricted
Stock Units and Dividend Equivalents in fully transferable shares of Stock or
50% in cash and 50% in fully transferrable shares of Stock by completing and
returning to the Company the election form attached to this Agreement. In the
absence of a timely election by Employee, Employee will receive payment for the
vested Restricted Stock Units and Dividend Equivalents in fully transferable
shares of Stock.

  (c)   Dividend Equivalents. In satisfaction of the Dividend Equivalents Award
made pursuant to Section 1, at the time of the Company’s delivery of payment
pursuant to Section 4(a), the Company also will deliver to Employee a payment
equal to the amount of dividends, if any, that Employee would have received if
Employee had directly owned the Stock to which the Restricted Stock Units relate
from the Date of Grant to the applicable Vesting Date, plus interest on such
amount at the rate of 5 percent compounded quarterly, as determined pursuant to
the Plan. Pursuant to the election filed by the Employee pursuant to
Section 4(b), payment for the Dividend Equivalents will be made in fully
transferrable shares of Stock, or 50% in cash and 50% in fully transferrable
shares of Stock. The number of shares of Stock distributed to Employee will be
determined by dividing the amount due by the Fair Market Value of one share of
Stock as of the applicable Vesting Date.

  5.   Termination of Award. Except as otherwise provided in Section 3 with
respect to Employee’s Retirement, in the event of the termination of Employee’s
active employment with the Company or any of its Subsidiaries, whether due to
voluntary or involuntary termination, death, disability or otherwise, Employee’s
right to receive and/or vest in any additional Restricted Stock Units under the
Plan, if any, will terminate. Any unvested Restricted Stock Units and the
related Dividend Equivalents will be forfeited effective as of the date that
Employee terminates active employment with the Company or any of its
Subsidiaries.

  6.   Section 409A Compliance.

  (a)   Purpose of this Provision. Section 409A of the Code imposes a number of
requirements on “non-qualified deferred compensation” plans and arrangements.
Based on regulations issued by the Internal Revenue Service, the Company has
concluded that this Award of Restricted Stock Units is subject to Section 409A.
As a result, unless the Plan and this Award Agreement are administered to comply
with the new rules, Employee will be required to pay an additional 20% tax (in
addition to regular income taxes) on the compensation provided by this Award
Agreement. In addition, under Section 409A additional interest will be payable.

 

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  (b)   Compliance with Section 409A. The Company intends to comply with
Section 409A by assuring that all amounts to which Employee becomes entitled
hereunder are payable at a specified time or pursuant to a fixed schedule within
the meaning of Treas. Reg. § 1-409A-3(a)(4). As a result, no payment or transfer
shall be made to Employee prior to the applicable Vesting Date. The provisions
of this Section 6(b) apply to all amounts due pursuant to this Award Agreement.

  (c)   Miscellaneous Payment Provisions. If the Company fails to make a payment
(including a transfer of Stock), either intentionally or unintentionally, within
the period required by Section 4, but the payment is made within the same
calendar year, it will be treated as made within the period required by
Section 4 pursuant to Treas. Reg. § 1.409A-3(d). In addition, if a payment is
not made due to a dispute in payments, payments can be delayed in accordance
with Treas. Reg. § 1.409A-3(g).

  (d)   Ban on Acceleration or Deferral. Under no circumstances may the time or
schedule of any payment made or benefit provided pursuant to this Award
Agreement be accelerated or subject to a further deferral except as otherwise
permitted or required pursuant to regulations and other guidance issued pursuant
to Section 409A of the Code.

  (e)   No Elections. Employee does not have any right to make any election
regarding the time or form of any payment due under this Award Agreement other
than the election described in Section 4(b).

  (f)   Compliant Operation and Interpretation. The Plan and this Award
Agreement shall be administered in compliance with Section 409A and each
provision of the Award Agreement and the Plan shall be interpreted, to the
extent possible, to comply with Section 409A.

  7.   Tax Withholding. Any and all payments made pursuant to this Award
Agreement shall be subject to applicable tax withholding requirements and
employment taxes. Employee must pay, or make arrangements acceptable to the
Company for the payment of any and all required federal, state, and local income
and payroll tax withholding. Employee may satisfy any such tax withholding
obligation by paying the amount by check. In the alternative, Employee may elect
to have the Company withhold shares of Stock having a Fair Market Value on the
applicable Vesting Date sufficient to cover the withholding obligation. Within
 _____  days after the Date of Grant, Employee must elect, on the election form
described in Section 4(b), to satisfy any tax withholding obligation by paying
the amount by check or by having the Company withhold shares of Stock having a
Fair Market Value on the applicable vesting date sufficient to cover the
withholding obligation. In the absence of a timely election by Employee,
Employee’s withholding obligation will be satisfied through the Company’s
withholding shares of Stock as set forth above.

  8.   Continued Employment. Nothing in the Plan or this Award Agreement shall
be interpreted to interfere with or limit in any way the right of the Company to
terminate Employee’s employment or services at any time. In addition, nothing in
the Plan or this Award Agreement shall be interpreted to confer upon Employee
the right to continue in the employ or service of the Company.

  9.   Voting Rights. Employee is not entitled to voting rights with respect to
shares of Stock by virtue of this Award. If the Committee, in its discretion,
issues Stock in settlement of Employee’s Restricted Stock Units, Employee will
have voting rights with respect to such shares of Stock.

 

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  10.   Non-Transferability. Neither this Award nor any rights under this Award
Agreement may be assigned, transferred, or in any manner encumbered except by
will or the laws of descent and distribution, and any attempted assignment,
transfer, mortgage, pledge or encumbrance except as herein authorized, will be
void and of no effect.

  11.   Definitions: Copy of Plan and Plan Prospectus. To the extent not
specifically defined in this Award Agreement, all capitalized terms used in this
Award Agreement will have the same meanings ascribed to them in the Plan.
Employee will receive a copy of the Plan and the related Plan Prospectus. In the
event of any conflict between the terms and conditions of this Award Agreement
and the Plan, the provisions of the Plan shall control.

  12.   Amendment. Except as otherwise provided in the Plan, this Award
Agreement may be amended only by a written agreement executed by the Company and
Employee.

  13.   Choice of Law. This Award Agreement will be governed by the laws of the
State of Arizona, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Award
Agreement to another jurisdiction.

An authorized representative of the Company has signed this Award Agreement as
of the Date of Grant.

                  PINNACLE WEST CAPITAL CORPORATION    
 
           
 
  By:        
 
     
 
   
 
  Its:        
 
     
 
   

 

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Pinnacle West Capital Corporation
RESTRICTED STOCK UNIT AWARD
ELECTION FORM
INFORMATION ABOUT YOU

              Last   First   Middle Initial   Employee ID#

1. PAYMENT ELECTION
In accordance with the terms of the Pinnacle West Capital Corporation 2007
Long-Term Incentive Plan and pursuant to Section 4(b) of the Award Agreement, I
hereby elect to receive payment for the Restricted Stock Units and Dividend
Equivalents that vest on the dates set forth below in the following form (place
an “X” in the “Stock” column or in the “50% Cash/50% Stock” column for each of
the years and types of Awards set forth below):

              Restricted Stock Units and Dividend Equivalents         50% Cash/
Vesting Date   Stock   50% Stock 02/20/2011   ¨   ¨ 02/20/2012   ¨   ¨
02/20/2013   ¨   ¨ 02/20/2014   ¨   ¨

2. TAX WITHHOLDING ELECTION
I hereby elect to satisfy any tax withholding obligation associated with my
receipt of stock in exchange for my Restricted Stock Units and Dividend
Equivalents in the following form (place an “X” in the “Check” column or in the
“Stock” column):

      Check   Stock (I will write a check on the vesting date for my taxes that
are due and deliver   (The Company should withhold it to the Company within one
(1) day of the release date of the Stock)   shares of my stock to cover my
taxes) ¨   ¨

              To the extent permitted by law, I hereby elect Federal tax
withholding of _____ percent (minimum may not be less than 25% and maximum may
not exceed 35%)    
 
           
 
 
 
PARTICIPANT NAME (PLEASE PRINT)        
 
           
 
           
 
  PARTICIPANT SIGNATURE       DATE

IMPORTANT NOTE:   Please complete and return this Election Form to Jennifer
Pertner at Mail Station 9996 by __________, 2010.

 

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