Exhibit 10.1

PERFORMANCE CASH AWARD AGREEMENT

THIS AWARD AGREEMENT is made and entered into as of May 10, 2017, by and between
Pinnacle West Capital Corporation (the “Company”), and Donald E. Brandt
(“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 2012 Long-Term Incentive Plan (the “Plan”), pursuant to which
Performance Cash Awards may be granted to employees of the Company and its
subsidiaries.

 
B.
The Company desires to grant to Employee a Performance Cash Award 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 Human Resources Committee of the Board
(the “HRC”), on March 29, 2017, the Company grants to Employee a maximum
Performance Cash Award of $4,000,000 (the “Performance Cash Award Maximum”),
with the specific amount of the Award that will be earned to be determined in
accordance with the terms set forth hereunder and in Attachment A attached
hereto (such earned amount, the “Performance Cash Award”).

2.
Award Subject to Plan. This Performance Cash Award is granted under and is
expressly subject to all of the terms and provisions of the Plan, which terms
are incorporated herein by reference, and this Award Agreement. 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. Capitalized terms shall have the
meanings ascribed to them herein, in Attachment A or in the Plan.

3.
Performance Period and Performance Criteria.

(a)
Performance Period. The Performance Period for this Award began on January 1,
2017 and ends on February 28, 2019.

(b)
Performance Criteria. No portion of the Performance Cash Award will be payable
unless the Company’s average return on equity for the period beginning January
1, 2017 and ending December 31, 2017 is at least 8.00% (the “ROE Condition”)
(except as set forth in Section 5(b) below). If the ROE condition is achieved,
all, none or a portion of the Performance Cash Award Maximum may become payable,
as described below. The Performance Cash Award Maximum is comprised of two
tranches. Tranche 1 of the Performance Cash Award Maximum will be determined by
the HRC based upon (i) the Company meeting the 2017 Earnings Threshold (as
defined in Attachment A) and (ii) the satisfaction, by the ROE Determination
Date, of Year 1 Milestones (as defined in Attachment A) towards the achievement
of the S/D Goals (as defined in Attachment A). Tranche 2 of the Performance Cash
Award Maximum will be based upon (i) the Company meeting the 2018 Earnings
Threshold (as defined in Attachment A), and (ii) the

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achievement of the S/D Goals by the Award Determination Date. The ROE condition,
the 2017 Earnings Threshold, the 2018 Earnings Threshold, the Year 1 Milestones
and the S/D Goals are collectively referred to below as the “Award Conditions.”

(c)
Award Determination Dates. The HRC shall determine at the February 2018 HRC
meeting (the “ROE Determination Date”) whether (i) the ROE Condition has been
met, (ii) the 2017 Earnings Threshold has been met and (iii) the Year 1
Milestones have been met. The HRC shall determine at the February 2019 HRC
meeting (the “Award Determination Date”) whether (i) the 2018 Earnings Threshold
has been met and (ii) the S/D Goals have been met. The HRC’s determination at
the ROE Determination Date whether the Year 1 Milestones have been met may not
be revisited by the HRC for purposes of the determination of any subsequent
Performance Cash Award, but such finding shall not prevent the HRC from
determining at the Award Determination Date that the S/D Goals have been met.

(d)
Award Conditions Adjustments. The ROE Condition, the 2017 Earnings Threshold and
the 2018 Earnings Threshold shall be adjusted to exclude (i) the impact of rate
adjustments related to actions of the Arizona Corporation Commission (other than
the rate case of the Company that is pending as of the date of this Award
Agreement), and (ii) the effects of any retirement, or other adjustments to the
carrying value, of the Company’s coal plants. Any adjustments shall be confirmed
by the Chief Financial Officer of the Company and communicated to the HRC with
appropriate supporting calculations.

4.
Vesting. If Employee remains employed by the Company for the entire Performance
Period, or terminates employment earlier but nonetheless is potentially entitled
to a payment pursuant to Section 5 below, all, none or a portion of the
Performance Cash Award Target will vest based on satisfaction of the Award
Conditions and the other terms set forth hereunder and in Attachment A to this
Award Agreement as determined by the HRC in accordance with this Agreement.

5.
Forfeiture.

(a)
Failure to Meet Award Conditions.

(i)
If the HRC determines on the ROE Determination Date that the ROE Condition has
not been met, no portion of the Performance Cash Award Maximum shall be payable
under this Award Agreement and the Employee shall forfeit the right to receive
any Performance Cash Award hereunder and shall have no further rights with
respect to such Performance Cash Award.

(ii)
If at the Award Determination Date, the ROE Condition has been met but the HRC
determines that neither the 2017 Earnings Threshold nor the 2018 Earnings
Threshold has been met, no portion of the Performance Cash Award Maximum shall
be payable under this Award Agreement and the Employee shall forfeit the right
to receive any Performance Cash Award hereunder and shall have no further rights
with respect to such Performance Cash Award.

(iii)
If at the Award Determination Date, the ROE Condition has been met but the HRC
determines that only one of either the 2017 Earnings Threshold or the 2018
Earnings Threshold has been met, in no event shall the Performance Cash Award be
less than

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$2,000,000; provided, however, that if at the Award Determination Date, the HRC
determines that the S/D Goals have been less than fully satisfied, then the
Performance Cash Award may, in the HRC’s discretion, be adjusted to reflect such
partial achievement of the S/D Goals.

(b)
Death or Disability. Prior to March 1, 2018, if the Employee’s employment by the
Company terminates by reason of death or if the HRC determines that Employee is
suffering from a Disability, the Employee (or the Employee’s estate or permitted
beneficiary(ies) in the event of the Employee’s death) will be eligible to
receive all or a portion of the Performance Cash Award Maximum as the HRC shall
determine in its discretion with due regard to the progress of the Employee
toward meeting the applicable Award Conditions had the Employee otherwise
remained employed through the Award Determination Date; provided, however, that
in no event shall the Performance Cash Award be less than $2,000,000. Between
March 1, 2018 and the Award Payment Date, if the Employee’s employment by the
Company terminates by reason of death or if the HRC determines that Employee is
suffering from a Disability, the Employee (or the Employee’s estate or permitted
beneficiary(ies) in the event of the Employee’s death) will receive the entire
Performance Cash Award Maximum. For purposes of this Award Agreement, Employee
shall be considered to be suffering from a “Disability” if Employee is, by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than 3 months under an accident and health plan covering employees
of the Company.

(c)
Retirement. Prior to March 1, 2018, if the Employee’s employment by the Company
terminates by reason of Normal Retirement (as defined in the Pinnacle West
Capital Corporation Retirement Plan), then Employee shall forfeit the right to
receive any Performance Cash Award hereunder and the Employee shall have no
further rights with respect to such Performance Cash Award. Between March 1,
2018 and the Award Payment Date, if the Employee’s employment by the Company
terminates by reason of Normal Retirement, then the Employee shall receive (i) a
Performance Cash Award of $2,000,000 subject to a determination by the HRC that
the (A) ROE Condition, (B) 2017 Earnings Threshold, and (C) Year 1 Milestones
each have been met, plus (ii) up to an additional $2,000,000 Performance Cash
Award as the HRC may determine if at the time of the Employee’s Normal
Retirement, the Board has selected and elected the Employee’s successor.

(d)
Termination For Cause. In the event Employee is terminated by the Board for
Cause during the Performance Period, Employee shall forfeit the right to receive
any Performance Cash Award hereunder and the Employee shall have no further
rights with respect to such Performance Cash Award. For purposes only of this
Section 5(d), “Cause” means (A) embezzlement, theft, fraud, deceit and/or
dishonesty by the Employee involving the property, business or affairs of the
Company or any of its subsidiaries, or (B) an act of moral turpitude which in
the sole judgment of the Board reflects adversely on the business or reputation
of the Company or any of its subsidiaries or negatively affects any of the
Company’s or any of its subsidiaries’ employees or customers.

(e)
Termination Without Cause. Prior to March 1, 2018, if the Employee’s employment
as Chief Executive Officer of the Company is terminated by the Board without
Cause, then

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the Employee shall receive a Performance Cash Award of $2,000,000 subject to a
determination by the HRC that the ROE Condition has been met. Between March 1,
2018 and the Award Payment Date, if the Employee’s employment as Chief Executive
Officer of the Company is terminated by the Board without Cause, then the
Employee shall receive a Performance Cash Award of $4,000,000 subject to a
determination by the HRC that the ROE Condition has been met.

6.
Payment. Except as otherwise provided below in this Section 6, the portion of
the Performance Cash Award Maximum that vests hereunder shall be paid in cash to
the Employee (or to the Employee’s estate or permitted beneficiary(ies)) on
February 28, 2019 (the “Award Payment Date”).

(a)
Death or Disability. If any payment is owed to Employee pursuant to Section 5(b)
of this Award Agreement, the portion of the Performance Cash Award Maximum that
vests in accordance with that provision shall be paid in cash to the Employee
(or to the Employee’s estate or permitted beneficiary(ies)) within 30 days
following the Employee’s death or within 30 days following the HRC’s
determination that Employee is suffering from a Disability, as applicable.

(b)
Retirement. If any payment is owed to Employee pursuant to Section 5(c) of this
Award Agreement, the portion of the Performance Cash Award Maximum that vests in
accordance with that provision shall be paid in cash to the Employee within 30
days following the later of (i) the Employee’s Termination of Employment or
(ii) the HRC’s determination of the amount of the Award payable to the Employee
pursuant to the terms of Section 5(c), but in no event later than March 15,
2019.

(c)
Termination Without Cause. If any payment is owed to Employee pursuant to
Section 5(e), the amount of the Award that vests in accordance with those
provisions shall be paid in cash to the Employee within thirty (30) days of the
later of (A) the ROE Determination Date or (B) the Employee’s date of
Termination of Employment. Any payment made pursuant to this Section 6(c) of the
Award Agreement shall be payable only upon the execution by the Employee of an
appropriate release of claims against the Company and any such payment shall be
in addition to all other compensation that may be owed to the Employee pursuant
to any other Company benefit plans, agreements or compensatory arrangements. The
release shall be provided to Employee on the date of his Termination of
Employment.  Employee will then have 21 days within which to consider signing
the release.  After signing the release, the Employee shall have seven days
within which to revoke the release.  If the Employee fails to sign the release,
or if the Employee revokes the release, within the above-described time periods,
Employee shall not be entitled to any payment pursuant to this Award Agreement. 
If the release consideration period and the release revocation period span two
calendar years, no payment will be made until the second calendar year.

(d)
Delay in Commencement of Payment. Notwithstanding anything herein to the
contrary, if at the time of Employee’s Termination of Employment, the Employee
is a "specified employee" as defined in Section 409A of the Code, and the
deferral of the commencement of any payments or benefits otherwise payable
hereunder as a result of such Termination of Employment is necessary in order to
comply with Section 409A of the Code and to avoid the imposition of taxes or
penalties thereunder, then the Company will defer the

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commencement of the payment of any such payments or benefits hereunder to the
date that is six months and one day following the Employee’s Termination of
Employment with the Company (or the earliest date as is permitted under Section
409A of the Code). If a payment is delayed as a result of Employee being a
Specified Employee, such payment owed shall earn interest at the same rate as
the market interest rate determined in accordance with Item 402(c)(2)(viii) of
Regulation S-K under the United States Securities Act of 1933 for the Deferred
Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and
Affiliates from the time the payment would have been made had the Employee not
been a Specified Employee until such payment is made in accordance with this
Section 6(d).

(e)
Impact on Retirement Plans. Any Performance Cash Award paid to Employee will be
disregarded for purposes of calculating the amount of Employee’s benefit under
any Company retirement plans.

7.
Tax Withholding; Limited Acceleration of Payment. Employee is responsible for
any and all federal, state, and local income, payroll or other tax obligations
or withholdings (collectively, the “Taxes”) arising out of this Award. Employee
shall pay any and all Taxes due in connection with a payout hereunder by check
or by having the Company withhold cash from any payout of the Award. No later
than June 1, 2017, Employee must elect, on the election form attached hereto,
how Employee will satisfy the tax obligations upon a payout. In the absence of a
timely election by Employee, Employee’s tax withholding obligation will be
satisfied through the Company’s withholding cash from any payout of the Award as
set forth above.

Payment of the Award shall be accelerated in accordance with Treas. Reg.
§ 1.409A‑3(j)(4)(vi) to the limited extent necessary to provide Employee with
the funds necessary to pay employment taxes that may become due prior to the
payment dates described in Section 6 as well as the related income tax
withholding amounts. The total payments under this acceleration provision,
however, may not exceed the aggregate of the employment taxes and the income tax
withholding related to the employment taxes.

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 or
its subsidiaries 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 or its subsidiaries.

9.
Confidentiality. During Employee’s employment and after termination thereof, for
any reason, Employee agrees that Employee will not, directly or indirectly, in
one or a series of transactions, disclose to any person, or use or otherwise
exploit for Employee’s own benefit or for the benefit of anyone other than the
Company or any of its Affiliates any Confidential Information (as hereinafter
defined), whether prepared by Employee or not; provided, however, that during
the term of Employee’s employment, any Confidential Information may be disclosed
(i) to officers, representatives, employees and agents of the Company and its
Affiliates who need to know such Confidential Information in order to perform
the services or conduct the operations required or expected of them in the
business, and (ii) in good faith by Employee in connection with the performance
of Employee’s job duties to persons who are authorized to receive such
information by the Company or its Affiliates. Employee shall have no obligation
to keep confidential any Confidential Information, if and to the extent
disclosure of any such information is required by

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law; provided, however, that in the event disclosure is required by applicable
law, Employee shall provide the Company with prompt notice of such requirement
so that it may seek an appropriate protective order.

Employee agrees that all Confidential Information of the Company and its
Affiliates (whether now or hereafter existing) conceived, discovered or made by
him during employment exclusively belongs to the Company or its Affiliates (and
not to Employee). Employee will promptly disclose such Confidential Information
to the Company and perform all actions reasonably requested by the Company to
establish and confirm such exclusive ownership. For purposes of this Section 9,
the term “Confidential Information” shall mean and include any information
disclosed to Employee any time during Employee’s employment with the Company or
its Affiliates or thereafter which is not generally known to the public,
including, but not limited to, information concerning the Company’s or its
Affiliates’ assets and valuations, business plans, methods of operation,
management, information systems, procedures, processes, practices, policies,
plans, programs, personnel and/or reports or other information prepared by
appraisers, consultants, advisors, bankers or attorneys.

10.
Restrictive Covenants.

(a)
Non-Competition.  Employee agrees that for a period of 12 months following any
Termination of Employment voluntarily by Employee (other than due to
Disability),  Employee shall not, without the prior written consent of the
Company’s General Counsel, participate, whether as a consultant, employee,
contractor, partner, owner (ownership of less than 5% of the outstanding stock
of a publicly traded company will not be considered ownership under this
provision), co-owner, or otherwise, with any business, corporation, group,
entity or individual that is or intends to be engaged in the business activity
of supplying electricity in any area of Arizona for which the Company or its
Affiliates is authorized to supply electricity.

(b)
Employee Non-Solicitation. Employee agrees that for a period of 12 months
following Employee’s Termination of Employment for any reason, Employee will not
encourage, induce, or otherwise solicit, or actively assist any other person or
organization to encourage, induce or otherwise solicit, directly or indirectly,
any employee of the Company or any of its Affiliates to terminate his or her
employment with the Company or its Affiliates, or otherwise interfere with the
advantageous business relationship of the Company and its Affiliates with their
employees.

(c)
Remedies. If Employee fails to comply with Sections 9, 10(a), or 10(b) in a
material respect, the Company may (i) cause any of Employee’s unvested
Performance Cash Award to be forfeited, (ii) refuse to deliver any cash owed
hereunder, and/or (iii) pursue any other rights and remedies the Company may
have pursuant to this Award Agreement or the Plan at law or in equity including,
specifically, injunctive relief. If Employee is in breach of any of the
provisions of this Section 10, then the time periods set forth in Sections 10(a)
and (b) will be extended by the length of time during which Employee is in
breach of such provisions.

11.
Cooperation with Government Agencies. Employee shall have no obligation to keep
confidential any Confidential Information, if and to the extent disclosure of
any such information is specifically permitted by law, because Employee is
providing information to government

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investigatory or enforcement agencies, such as the Nuclear Regulatory
Commission, Department of Labor, Equal Employment Opportunity Commission (or its
state equivalent), National Labor Relations Board, the Occupational Safety and
Health Administration (or its state equivalent) or the Securities and Exchange
Commission. This Agreement also does not limit Employee’s ability to communicate
with any government agency regarding matters within the agency’s jurisdiction or
otherwise participate in any investigation or proceedings that may be conducted
by such agency, including providing documents or other information without
notice to the Company. Nothing in this Agreement shall prevent Employee from the
disclosure of Confidential Information or trade secrets that: (i) is made:
(a) in confidence to a federal, state or local government official, either
directly or indirectly, or to an attorney; and (b) solely for the purpose of
reporting or investigating a suspected violation of law; or (ii) is made in a
complaint or other document filed in a lawsuit or other proceeding, if such
filing is permitted to be made, and is made, under seal. In the event that
Employee files a lawsuit alleging retaliation by Company for reporting a
suspected violation of law, Employee may disclose Confidential Information or
trade secrets related to the suspected violation of law or alleged retaliation
to Employee’s attorney and use the Confidential Information or trade secrets in
the court proceeding if Employee or Employee’s attorney: (i) files any document
containing Confidential Information or trade secrets, under seal if permitted;
and (ii) does not disclose the Confidential Information or trade secrets, except
pursuant to or in accordance with a court order. The Company provides this
notice in compliance with federal law, including the Defend Trade Secrets Act of
2016.

12.
Section 409A Compliance. If the Company concludes, in the exercise of its
discretion, that this Award is subject to Section 409A of the Code, the Plan and
this Award Agreement shall be administered in compliance with Section 409A and
each provision of this Award Agreement and the Plan shall be interpreted to
comply with Section 409A. If the Company concludes, in the exercise of its
discretion, that this Award is not subject to Section 409A, but, instead, is
eligible for the short-term deferral exception to the requirements of Section
409A, the Plan and this Award Agreement shall be administered to comply with the
requirements of the short-term deferral exception to the requirements of
Section 409A and each provision of this Award Agreement and the Plan shall be
interpreted to comply with the requirements of such exception. In either event,
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 tax withholding
election described in Section 7.

13.
Clawback. The portion of this Award, if any, that is earned based on the
Company’s return on equity, the 2017 Earnings Threshold or the 2018 Earnings
Threshold will be subject to potential forfeiture or recovery to the extent
called for by the Company’s Clawback Policy, which is intended to be responsive
to the final rules to be issued by the Securities and Exchange Commission and
the listing standards to be adopted by the New York Stock Exchange pursuant to
Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Clawback Policy may include such other provisions as the HRC determines to
be necessary or appropriate either to comply with any applicable law or listing
standard or in light of Company ethics or other policies and practices. Specific
requirements of the Clawback Policy may be adopted and amended at such times as
the HRC determines in its discretion. By accepting this Award, Employee consents
and agrees to abide by such Clawback Policy.

14.
Non-Transferability. Neither this Award nor any rights under this Award
Agreement may be assigned, transferred, or in any manner encumbered except as
provided in the Plan.

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15.
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. By signing
this Award Agreement, Employee acknowledges receipt of a copy of the Plan and
the related Plan prospectus.

16.
Amendment. Except as provided below, any amendments to this Award Agreement must
be made by a written agreement executed by the Company and Employee. The Company
may amend this Award Agreement unilaterally, without the consent of Employee, if
the change (i) is required by law or regulation, (ii) does not adversely affect
in any material way the rights of Employee, or (iii) is required to cause the
benefits under the Plan to qualify as performance-based compensation within the
meaning of Section 162(m) of the Code or to comply with the provisions of
Section 409A of the Code and applicable regulations or other interpretive
authority. Additional rules relating to amendments to the Plan or any Award
Agreement to assure compliance with Section 409A of the Code are set forth in
Section 17.15 of the Plan.

17.
Performance-Based Award. This Award is intended to be a Performance-Based Award
if Employee is considered to be a Covered Employee for the tax year of the
Company for which the Company claims a related tax deduction.

IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed,
as of the Date of Grant, by an authorized representative of the Company and this
Award Agreement has been executed by Employee.

 
PINNACLE WEST CAPITAL CORPORATION
 
 
 
By:     /s/ Lee R. Nickloy            
 
Its: Vice President and Treasurer
 
Date: May 10, 2017
 
 
 
EMPLOYEE
 
 
 
By:    /s/ Donald E. Brandt
 
Date: May 10, 2017