<PAGE>
EXHIBIT 10.1
PERFORMANCE SHARE AGREEMENT
UNDER THE
PINNACLE WEST CAPITAL CORPORATION 2002
LONG-TERM INCENTIVE PLAN
THIS AWARD
AGREEMENT is made and entered into as of ___________, 200__
(the "Date of Grant"), by and between
Pinnacle West Capital Corporation (the
"Company"), and <<Name>>
("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 2002 Long-Term Incentive Plan (the
"Plan"),
pursuant to which performance share incentive awards may be
granted
to employees of the Company and its subsidiaries and certain
other
individuals.
B.
The
Company desires to grant to Employee a performance share 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 Committee (as
defined herein) which was taken on the Date of Grant, the
Company grants to Employee <<Shares>> performance
shares
("Performance Shares") subject to the terms, conditions, and
adjustments set forth in this Award Agreement. The Performance
Shares granted under this Section 1 are referred to in this
Award Agreement as the "Base Grant."
2. AWARD
SUBJECT TO PLAN. This 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. The Committee described in Section 4 of
the Plan (the "Committee") has been appointed by the Board of
Directors, and designated by it, as the Committee to make
awards.
3.
PERFORMANCE PERIOD. The performance period for this award
begins _________ __, 20___, and ends _____________ __, 20___
(the "Performance Period").
4.
PAYMENT.
(a) PERFORMANCE
SHARES PAYABLE IN COMMON STOCK. Subject to
early termination of this Award Agreement pursuant to
Section 7 below, as soon as practicable following the
end of the Performance Period and the determination of
the Company's Earnings Per Share Growth Rate (as defined
herein) as compared to the Earnings Per Share Growth
Rate of the Index set forth on Attachment A (the
"Index") over such Performance Period but in no event
later than December 31, 20___, the Company will deliver
to Employee one (1) share of the Company's Common Stock
for each then-outstanding Performance Share under this
Award Agreement. If the Employee terminates employment
after the end of the Performance
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Page 2
Performance Share Agreement
Period but before distribution of any shares pursuant to
this Award Agreement, the distribution of the shares
will not be made until six (6) months following the
Employee's termination of employment if required by
Section 409A of
the Code.
(b) DIVIDEND
EQUIVALENTS. At the time of the Company's
delivery of Common Stock to Employee pursuant to
Subsection 4(a) above, the Company will also deliver to
Employee a cash payment equal to the amount of dividends
that Employee would have received if Employee had
directly owned all of such Common Stock during the
Performance Period, plus interest on such amount at the
rate of _____ percent, compounded quarterly.
(c) MAXIMUM
AWARD. Employee may not receive more than
120,000 shares of Common Stock under this Award
Agreement.
5.
PERFORMANCE CRITERIA AND ADJUSTMENTS.
ADJUSTMENT OF BASE GRANT. The Base Grant will increase or
decrease based upon the Company's "Earnings Per Share Growth
Rate" as compared to the Earnings Per Share Growth Rate of the
Index during the Performance Period, as follows:
<TABLE>
<CAPTION>
IF THE COMPANY'S EARNINGS PER SHARE
COMPOUND GROWTH RATE
THE NUMBER OF
OVER THE PERFORMANCE PERIOD AS
COMPARED TO THE INDEX IS:
PERFORMANCE SHARES WILL BE:
----------------------------------------------------------
---------------------------
<S>
<C>
___th Percentile or Greater
___ X Base Grant
___th Percentile
___ X Base Grant
___th Percentile
Base Grant
___th Percentile
___ X Base Grant
Less than ___th Percentile
[None / ___X Base Grant]
</TABLE>
If intermediate percentiles are achieved, the number of
Performance Shares awarded will be prorated (partial shares
will be rounded dow
