exv10w06w05













Exhibit 10.6.5




Summary of 2009 Incentive Plans




     On January 21, 2009, the Board of Directors of Pinnacle West, acting on the recommendation of
the Board’s Human Resources Committee (the “Committee”), approved the 2009 Pinnacle West Employee
Incentive Plan (the “Pinnacle West Incentive Plan”) and the 2009 APS Employee Incentive Plan (the
“APS Incentive Plan”) (collectively, the “2009 Plans”). The 2009 Plans provide incentive award
opportunities for Pinnacle West and APS employees, including the following “named executive
officers” from the Company’s proxy statement relating to its 2009 Annual Meeting: James R.
Hatfield, Senior Vice President and Chief Financial Officer; Donald E. Brandt, Pinnacle West’s
President and Chief Operating Officer and the Chief Executive Officer of APS; Randall K. Edington,
Executive Vice President and Chief Nuclear Officer of APS; and Steven M. Wheeler, Executive Vice
President, Customer Service and Regulation, of APS. Mr. Post will be retiring this year and will
not be participating in the 2009 Plans.



     From January 1, 2009 through April 30, 2009, Mr. Brandt’s incentive opportunities will be
under the APS Incentive Plan. As discussed above, Mr. Brandt will be assuming the positions of
Chairman of the Board and Chief Executive Officer of Pinnacle West, effective April 30, 2009. As a
result, Mr. Brandt’s incentive opportunities from May 1, 2009 through December 31, 2009 will be
under the Pinnacle West Incentive Plan. As required by the Committee’s Charter, the Committee,
rather than the Board, approved the “Chairman and CEO” component of the Pinnacle West Incentive
Plan for Mr. Brandt for this eight-month period. Mr. Brandt’s incentive opportunities under the
Pinnacle West Incentive Plan and the APS Incentive Plan will be pro-rated based on the number of
months he is subject to each 2009 Plan.



     The award opportunity for Mr. Brandt is based on APS’ 2009 earnings (while he is subject to
the APS Incentive Plan) and on Pinnacle West’s 2009 earnings (while he is subject to the Pinnacle
West Incentive Plan), excluding, in each case, impacts from certain Arizona Corporation Commission
rate decisions. The Committee will evaluate impacts of unusual or nonrecurring adjustments on
actual earnings. Once the earnings threshold is met, the achievement of the level of earnings
generally determines what award, if any, the participant receives. However, the amount of the
award, if any, is in the sole discretion of the Committee. Accordingly, the Committee may consider
factors other than earnings, such as shareholder value creation, customer service, financial
strength, operating performance, and safety. Subject to the foregoing, Mr. Brandt has an award
opportunity of up to 50% of his base salary if a threshold earnings level is met, up to 100% of his
base salary if a midpoint earnings level is met, and up to 150% of his base salary if a maximum
earnings level is met.



     In the case of Messrs. Hatfield, Edington and Wheeler, the APS Incentive Plan is composed of
two components, one of which is based on APS’ 2009 earnings and the other on the achievement of
specified business unit results. For Messrs. Hatfield, Edington and Wheeler, once the specified APS
earnings threshold is met (subject to the potential earnings adjustments discussed above), the
achievement of the level of earnings and business unit results generally determines what award, if
any, they will receive. However, the amount of
the award, if any, to each participant in the APS Incentive Plan is in the sole discretion of
the Committee. Accordingly, the Committee may consider factors other than APS earnings and the
achievement



 









 




of business unit results, such as shareholder value creation, customer service,
financial strength, operating performance, safety, and the Chief Executive Officer’s assessment of
the officer’s individual performance during the year, to measure performance. Subject to the
foregoing, Mr. Hatfield, Mr. Edington and Mr. Wheeler each has an award opportunity of up to 25% of
his base salary if the midpoint earnings level is met and up to 50% of his base salary if the
maximum earnings level is met.




     In the case of Mr. Hatfield, Mr. Edington and Mr. Wheeler, the APS Incentive Plan details
“critical success indicators” for specific business units. Once an APS earnings threshold is met,
the Committee will consider the achievement of the critical success indicators, which the Committee
may weigh as it deems appropriate in determining an incentive opportunity for each individual up to
50% of his base salary. In the case of Mr. Hatfield, the Committee will consider the following key
critical success indicators in the Shared Services business unit: (i) the average of the Fossil
business unit results (safety performance, environmental performance and production) and the Palo
Verde business unit results (safety performance; performance improvement in other key areas, such
as equipment reliability and plant metrics; production, including site capacity factor and outage
durations; and financial performance); (ii) the Customer Service, Delivery and Regulatory business
unit results (safety performance, customer experience survey, business performance trends, customer
reliability, and environmental performance); (iii) shared services costs; and (iv) shared services
safety. In the case of Mr. Edington, the Committee will consider the following key critical
success indicators in the Palo Verde Nuclear Generation Station business unit: safety performance;
performance improvement in other key areas, such as equipment reliability and plant metrics;
production, including site capacity factor and outage durations; and financial performance. In the
case of Mr. Wheeler, the Committee will consider the following key critical success indicators in
the Customer Service, Delivery, and Regulatory business unit: safety performance; customer
experience survey; business performance trends; customer reliability; and environmental
performance.