Exhibit 10.6.5





Exhibit 10.6.5




Summary of 2011 Incentive Plans




On December 14, 2010, the Human Resources Committee (the “Committee”) of the Pinnacle West
Capital Corporation (“Pinnacle West”) Board of Directors (the “Board”) approved the Pinnacle West
2011 Annual Incentive Award Plan (the “PNW Plan”), which provides an incentive award opportunity
for Donald E. Brandt, the Chairman of the Board, President, and Chief Executive Officer of Pinnacle
West and the Chairman of the Board and Chief Executive Officer of Arizona Public Service Company
(“APS”). On December 15, 2010, the Board, acting on the recommendation of the Committee, approved
the APS 2011 Annual Incentive Award Plan (the “APS Plan”) and the APS 2011 Annual Incentive Award
Plan for PVNGS Employees (the “Palo Verde Plan”), which provide incentive award opportunities for
Pinnacle West and APS employees, including the following “named executive officers” from the 2010
Proxy Statement: James R. Hatfield, Senior Vice President, Chief Financial Officer and Treasurer;
Randall K. Edington, Executive Vice President and Chief Nuclear Officer of APS; David P. Falck,
Executive Vice President, General Counsel and Secretary; and Donald G. Robinson, President and
Chief Operating Officer of APS. The PNW Plan, the APS Plan, and the Palo Verde Plan are referred to
collectively herein as the “2011 Plans.”



No incentive payments will be awarded under the PNW Plan or the APS Plan unless Pinnacle West,
with respect to Mr. Brandt, and APS, with respect to Messrs. Hatfield, Falck and Robinson, achieves
a specified threshold earnings level. No incentive payment will be awarded under the Palo Verde
Plan with respect to Mr. Edington unless the Palo Verde Nuclear Generating Station (“Palo Verde”)
achieves specified threshold business unit performance goals. The Committee may evaluate the
impacts of unusual or nonrecurring adjustments to earnings in determining whether any earnings
level has been met for purposes of the 2011 Plans, and the impacts of any sale or disposal of real
estate development operations will be excluded for purposes of the PNW Plan.



The award opportunity for Mr. Brandt under the PNW Plan is based on the achievement of
specified 2011 Pinnacle West earnings levels and the award opportunity for Mr. Robinson under the
APS Plan is based on the achievement of specified 2011 APS earnings levels. The awards achieved may
be further adjusted by the Committee based upon its evaluation of each officer’s individual
performance. Mr. Brandt has an award opportunity of up to 50% of his base salary if the threshold
earnings level is met, up to 100% of his base salary if a target earnings level is met, and up to
150% of his base salary if a maximum earnings level is met, before adjustment for individual
performance. Mr. Robinson has an award opportunity of up to 37.5% of his base salary if the
threshold earnings level is met, up to 75% of his base salary if a target earnings level is met,
and up to 150% of his base salary if a maximum earnings level is met, before adjustment for
individual performance. In considering each officer’s individual performance, the Committee may
take into account factors such as shareholder value creation, customer service, financial strength,
operating performance and safety.


 


 









 





The award opportunities for Messrs. Hatfield and Falck under the APS Plan and for Mr. Edington
under the Palo Verde Plan are based on the achievement of specified 2011 APS earnings levels and
specified business unit performance goals. The awards achieved may be further adjusted by the
Committee, with input from the Chief Executive Officer, based upon its evaluation of each officer’s
individual performance. Messrs. Hatfield and Falck have a target award opportunity of up to 50% of
their base salary. Messrs. Hatfield and Falck may earn less than the target amount or more, up to a
maximum award opportunity of up to 100% of their base salary, depending on the achievement of the
earnings and business unit performance goals separately or in combination, and before adjustment
for individual performance. Mr. Edington has an award opportunity of 12.5% of his base salary up to
100% of his base salary depending on the achievement of the earnings and business unit performance
goals, separately or in combination, and before adjustment for individual performance. The business
unit performance measures that will be considered for Messrs. Hatfield and Falck are derived from
APS’ critical areas of focus as provided in its Strategic Framework: customers and communities,
employees, operational excellence and shareholder value. In considering each officer’s individual
performance, with input from the Chief Executive Officer, the Committee may take into account
factors such as shareholder value creation, customer service, financial strength, operational
performance and safety. The business unit performance indicators that will be considered for Mr.
Edington are in the areas of safety, employee performance, achievement of operational metrics for
Palo Verde, performance improvement in key areas, and cost management.