Pinnacle West Capital Corp DEF 14A, filed Apr 4, 2024

Pinnacle West Capital Corp (PNW)

DEF 14A 2024-04-04 For: 2023-12-31

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Added on June 12, 2026

About this DEF 14A

Pinnacle West Capital Corp filed this DEF 14A on April 4, 2024.

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			Preliminary Proxy Statement
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			Definitive Proxy Statement
			Definitive Additional Materials
			Soliciting Material under §240.14a-12


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Glynis A. Bryan	Gonzalo A. de la Melena, Jr.	Richard P. Fox


Kathryn L. Munro	Bruce J. Nordstrom	Paula J. Sims


William H. Spence	Kristine L. Svinicki	James E. Trevathan, Jr.



TABLE OF CONTENTS

	A Message from Our Chairman, President and CEO		i

	A Message from Our Independent Directors		iv

	Notice of the 202 4 Annual Meeting of Shareholders		1

	Proxy Statement Summary		3
	The Value We Create		4
	The Value We Create for Our Stakeholders		4
	Financial Highlights		5
	Customer Highlights		6
	Employee Highlights		9
	Our Key Areas of Focus		11
	Environmental Highlights		13
	Community Highlights		15
	Governance Highlights		17
	Board Highlights		18
	Compensation Highlights		20
	Information About Our Board and Corporate Governance		22
	Director Nomination Process		22
	Board Effectiveness		26
	Board and Committee Structure		30
	Board Oversight and Engagement		37
	Director Nominees for the 202 4 Annual Meeting		44
		Proposal 1: Election of Directors	44
	Director Nominees		46
	Director Independence		55
	Director Compensation		56
	Executive Compensation		59
		Proposal 2: Advisory Vote on Executive Compensation	59
	Human Resources Committee Report		60
	Compensation Discussion and Analysis (“CD&A”)		61
	Executive Compensation Tables		88
	Pay Ratio		107
	Pay Versus Performance		108
	Audit Matters		115
		Proposal 3: Ratification of the Appointment of D&T as the Independent Registered Public Accounting Firm for the Company	115
	The Independent Accountant		115
	Pre-Approval Polic ies		116



			Audit Fees									116
			Report of the Audit Committee									117
			Stock Matters									118
			Ownership of Pinnacle West Stock									118
			Section 16(a) Beneficial Ownership Reporting Compliance									119
			Deli n quent Section 16(a) Reports									119
			General Information									120
			Time, Date and Place									120
			Notice of Internet Availability									120
			Record Date; Shareholders Entitled to Vote									120
			Voting									121
			Quorum									122
			Vote Required									122
			Board Recommendations									123
			Delivery of Annual Reports and Proxy Statements to a Shared Address and Obtaining a Copy									123
			Shareholder Proposals for the 202 5 Annual Meeting									124
			Proxy Solicitation									124
			Other Matters									125
			Related Party Transactions									125
			Human Resources Committee Interlocks and Insider Participation									125
			Helpful Resources									126
			Appendix A : Rules of Conduct for the Pinnacle  West Capital Corporation Annual Meeting of Shareholders									127


			Filed by the Registrant						Filed by a Party other than the Registrant



To our Shareholders: On behalf of our Board of Directors, management, and employees, I invite you to participate in our 2024 Annual Meeting of Shareholders. The meeting will be held at 1:30 p.m. (EDT), Wednesday, May 22, 2024. Details regarding how to attend the meeting and the business to be conducted are in the accompanying Notice of Annual Meeting and Proxy Statement.



			INDEX OF FREQUENTLY REQUESTED INFORMATION
			Auditor Fees			116
			Beneficial Ownership Table			118
			Board Evaluations			28
			Board Leadership			30
			CEO Pay Ratio			107
			Clawback Policies			86
			Code of Ethic a l Conduct			39
			Company Culture			37
			Compensation Consultant			70
			Corp orate Gov ernance Guidelines			22
			Director Attendance			37
			Director Independence			55
			Director Biographies			46
			Director Nominee Skills Matrix			45
			Director Tenure			18
			Financial Highlights			5
			Human Capital Management			38
			Lead Director Duties			30
			Management Succession			41
			Named Executive Officers (“NEOs”) for 2023			61
			Pay Versus Performance			108
			Peer Group			72
			Per q uisit es			85
			Related Party Transactions			125
			Risk Oversight			39
			Stock Ownership Guidelines			86
			Strategic Plan			37
			Succession Planning			41
			Sustainability			38


			VOTING ITEMS
			1.To elect nine Directors to serve until the 2025 Annual Meeting of Shareholders
			FOR each Director nominee
			2.To hold an advisory vote to approve executive compensation
			FOR
			3.To ratify the appointment of our independent registered public accounting firm for the year ending December 31, 2024
			FOR


Your vote is important. Whether you plan to participate in the Annual Meeting or not, please promptly vote by telephone, via the internet, by Proxy Card, or by Voting Instruction Form. By order of the Board of Directors, Diane Wood Corporate Secretary April 4, 2024 The Proxy Statement and form of proxy are first being made available to shareholders on or about April 4, 2024.



			May 22, 2024 1:30 p.m. Eastern Daylight Time EXECUTIVE OFFICES ADDRESS: PINNACLE WEST CAPITAL CORPORATION Post Office Box 53999 Phoenix, Arizona 85072-3999


						DATE AND TIME Wednesday, May 22, 2024 at 1:30 p.m. Eastern Daylight Time

						LOCATION Online at www.virtualshareholdermeeting.com/PNW

						WHO CAN VOTE All shareholders of record at the close of business on March 14, 2024, are entitled to notice of and to vote at the Annual Meeting

			ADVANCE VOTING METHODS
						INTERNET www.proxyvote.com

						TELEPHONE 1-800-690-6903

						MAIL Mark, sign, date, and mail your Proxy Card or Voting Instruction Form (a postage-paid envelope is provided for mailing in the United States)


Proposal	Board Recommendation	Page Reference

1.Election of Directors The Board of Directors and the Corporate Governance and Public Responsibility Committee believe that the nine nominees possess the skills and experience necessary to serve on the Board and have concluded that each nominee is qualified to serve as Director.	FOR	44


2.Advisory Vote on Executive Compensation The Company has designed its executive compensation program to align executives’ interests with those of our shareholders, make executives accountable for business and individual performance by putting pay at risk, and attract, retain, and reward the executive talent required to achieve our corporate objectives and to increase long-term shareholder value. We believe that our compensation policies and practices promote a pay-at-risk philosophy and, as such, are aligned with the interests of our shareholders.	FOR	59


3.Ratification of the Appointment of Deloitte & Touche LLP (“D&T”) as the Independent Registered Public Accounting Firm for the Company The Audit Committee has discussed the qualifications and performance of D&T and believes that the continued retention of D&T to serve as the Company’s independent registered public accounting firm is in the best interest of the Company and its shareholders.	FOR	115



			Financial
			Creating long-term value for our shareholders is dependent upon having the right strategy to drive our operational performance. We recognize the links between strong customer satisfaction, a constructive regulatory environment, and financial health and stability. To support future value creation for our shareholders, we are committed to enhancing our customer focus and improving our regulatory relationships. In addition, our strong customer growth and clean energy investments contribute to our potential to continue to build shareholder value.
			► Page 5


			Customers
			Customers are at the core of what we do every day at APS and we are committed to providing options that make it easier for them to do business with us. Recognizing that creating customer value is inextricably linked to increasing shareholder value, our focus remains on our customers and our goal of achieving an industry-leading customer experience.
			► Page 6


			Employees
			Our more than 6,000 dedicated employees strengthen our Company with their skills, experience, and diverse perspectives. We recognize that the next generation of employees has its own unique career expectations, and we are taking steps to support changing needs and priorities. We also continue to develop new strategies to attract and retain our highly-skilled employees and ensure they remain engaged during this time of change.
			► Page 9


			Environment
			APS demonstrates commitment to its role as a leader in environmental and sustainability stewardship by establishing sound environmental policies, managing environmental risks, implementing environmental management systems and driving the adoption of sustainable practices. Anchored by our Clean Energy Commitment to provide 100% clean, carbon-free electricity by 2050, our sustainability initiatives also include ensuring adequate water security, waste management, and biodiversity.
			► Page 13


			Communities
			In addition to powering Arizona, we empower communities across Arizona through programs and partnerships dedicated to improving the lives of Arizonans. We not only invest in the communities where we do business, we also focus on building meaningful relationships, which help us manage our social, economic, and environmental impact.
			► Page 15



			Customer Experience Strategy Council
			In 2021, we initiated an organization-wide customer experience strategy council designed to further drive a customer-centric culture, deliver more frictionless customer experiences, and improve JDP satisfaction performance. Through this and other ongoing initiatives, we continued to improve our customers’ experiences in 2023 by: •improving the ease-of-use of our automated phone system and advancing phone advisor soft skill development through updated training curriculum; •adding 1,100+ in-person payment locations, as well as introducing new customer payment channels, including Google and Apple Pay; •implementing numerous aps.com enhancements, including improving page-loading speeds, adding user-friendly dashboards, and making content more simple, relevant, and useful; •enhancing customer touchpoints throughout the outage journey and continuing to improve the functionality of our online outage center; •continuing to communicate with customers in their preferred channels about topics that matter most to them, including reliability, energy-efficiency, financial assistance, the environment, and programs that enable them to design their own personalized energy experience; and •continuing to focus on employee learning, training, tools, and resources to ensure all employees understood their role in our customers’ experiences.



			Limited Income Offerings
			We have assistance programs and direct customers to state and local assistance programs that provide discounts to qualified limited-income customers, as well as other non-income based assistance programs for customers struggling to pay their bills, including flexible payment arrangements and emergency utility bill assistance and, to ensure our most vulnerable customers are connected to these programs, we train and partner with more than 100 community action agencies. These programs include: •Crisis Bill Assistance. Qualified customers experiencing an unplanned major expense or an unexpected reduction in income can receive up to $1,000 a year to cover current or past due APS bills through the Crisis Bill Assistance program. This assistance provides approximately $2.5 million in annual funding. •Energy Support. Our Energy Support program gives qualified, limited-income customers a 25% discount or a 35% discount (if someone in the home has a life-threatening illness or uses critical medical equipment that requires electricity) on their bill each month. In 2023, more than 76,800 customers were enrolled in the program, providing approximately $36.9 million in discounts. •Customer Support Fund. Call Center advisors were able to provide $100 in utility bill assistance for customers struggling to pay their bill and experiencing a hardship. In total, this fund helped approximately 16,000 customers in 2023. •Project Share. This program encourages our customers and employees to make tax-deductible contributions through their monthly electric bills and employee paychecks, respectively. In addition, we match employee contributions dollar-for-dollar. All contributions are then administered by the Salvation Army to help customers who find themselves in a financial crisis pay their utility bills. •Safety Net and Guest Role. These programs allow customers to designate a friend or relative to receive a copy of their monthly APS bill and to serve as a reminder when payment is due and/or be notified if the account becomes past due. Also, individuals designated as “Guest Roles” can access account information with options to make payments and compare service plans. •Payment Arrangements. APS is committed to working with customers who continue to make good faith efforts to get current on their bills through partial or full payments, revised payment arrangements, and/or customer assistance. To help customers continue to pay down their outstanding balances and avoid disconnection, APS modified 339,000 payment arrangements in 2023. •State and Local Assistance. There were several additional assistance programs through Arizona in 2023 for qualified customers, including the Low-Income Housing Energy Assistance Program that works with Community Action Programs and other local providers to lower energy costs for customers struggling to pay their energy bills, as well as Emergency Rental Assistance Program, Housing Assistance Fund, and more. In 2023, 41,700 customers received $28.2 million in bill assistance from these sources.



			Focused on Our People
			Our Company seeks to attract, retain, and create a productive work environment for all employees. We believe the strength, talent, and commitment of our employees are significant contributors to our Company’s success. Talent Strategy •Internship programs: 57 summer internships were completed in 2023, 67% of interns were diverse, based on race, ethnicity, or gender •Apprentice programs: 130(1) apprentices in the programs, 36 of whom were hired into the programs in 2023 •Incoming engineer programs: Legacy Engineer Program (Palo Verde Generating Station (“PVGS”)); Rotational Engineer Program (Transmission and Distribution) •Enhanced recruitment marketing: Improved marketing collateral and increased job advertising (externally and internally) to attract top talent and create greater awareness of career opportunities available to employees •Strong commitment to our communities: Filled 121 Customer Care Center Associate I in 2023 roles utilizing community organizations and partnerships as talent sources. All hires were Arizona residents. Continued to support talent programs that support Arizona and aim to increase our diversity, such as the U.S. Department of Defense SkillBridge veteran hiring program, ElevateEdAZ Job Shadow Program for high school students, and the Arizona Latino Student Mentorship Program

			Retention •Robust employee engagement, including 11 Employee Network Groups (“ENG”) (see page 12 of this Proxy Statement to learn more about the variety of ENGs available) •Average employee tenure of 11.64 years due to strong talent strategy and an engaged workforce •Total turnover for 2023 was 8.2%, about one-third of which were related to retirements •Annual employee experience and focused quarterly pulse surveys allow us to gather employee feedback, identify opportunities for improvement, and take meaningful action in response to survey results •Actions taken in response to the surveys focus on improvements in targeted areas. Examples include improving communication between employees and leadership, improving internal processes, and employee recognition

			Development and Succession Planning •Graduated 152 employees from our leadership academies in 2023 •Conducted annual and ongoing succession planning conversations to support successor talent identification, development, and transition •Supported our modern learning culture by continuing to offer on-demand learning to our leaders and program participants who collectively completed over 9,500 development modules



			Inclusion and Belonging
			At APS, we believe that belonging matters. When we feel seen, heard, and valued, we can more effectively unite behind our APS Promise. You can find more information on the APS Promise on the inside back cover of this Proxy Statement. We create this sense of belonging through our commitment to inclusion. Inclusion at APS involves taking deliberate action to embrace the unique perspectives of each employee. True inclusion brings greater appreciation for our diversity. This allows us to equitably leverage our powerful workforce so we can succeed together to bring our APS Promise to life.


			Employee diversity:(1)						•We are a few years into the Inclusion and Belonging Strategy that we launched in 2021. Key activities include: •bringing inclusive leadership education to officers, senior leaders, business unit leadership teams, and other stakeholders, covering topics such as cultural competence and unconscious bias; •developing and launching self-paced modules for all employees, explaining how cultural competence drives inclusion of diverse groups; •conducting cultural competence assessments with our inclusion council groups and other key stakeholders; and •holding listening sessions with employees to learn about what matters most to them.
			•35% are ethnically or racially diverse •26% are female •14% are veterans

			New hires in 2023:
			•42% were ethnically or racially diverse •35% were female •8% were veterans

			39% of all officers are female(1) 18% of all officers are ethnically or racially diverse(1)



						The African American Network for Diversity and Inclusion’s mission is to create a collaborative and highly-engaged network of African-American employees that promote the interests of AANDI, its strategic initiatives, and the values of APS.
						The Lesbian, Gay, Bisexual & Transgender Alliance’s mission is to empower inclusion through community, support, and education.
						The Veteran Engagement, Transition & Retention Network’s mission is to develop opportunities benefiting our honored Arizona veterans. We strive to promote their service to our country, leadership skills, and the achievements of veterans in the organization.
						Women in Search of Excellence’s mission is to build a community at APS to further develop women as they achieve their personal and professional excellence.
						Palo Verde Young Generation in Nuclear’s mission is to unite young professionals for the purpose of strengthening its community by focusing on the success of nuclear technology.
						Palo Verde Women in Nuclear’s mission is to promote an environment in which all employees are able to succeed while working to encourage public awareness about nuclear energy.
						The Native American Network Organization’s mission is to attract and develop Native American talent by providing professional development opportunities, assisting in recruiting and retention, and encouraging community development.
						NextGen’s mission is to unite professionals new to the utility industry by providing professional development opportunities, enhance recruitment and retention, and organize community outreach programs.
						The Hispanic Organization for Leadership and Advancement promotes a culture of inclusiveness and community stewardship across APS, as well as develops high-performing leaders in pursuit of operational excellence and continuous self-improvement.
						Links’ mission is to connect experienced employees with opportunities for development, networking, and engagement.
						AsPIRE is dedicated to promoting awareness and understanding of the Asian American and Pacific Islander (“AAPI”) community and culture; advocating for diversity and inclusion in the workplace; and providing support and resources for AAPI employees to thrive and succeed in their careers.



Path Forward			Steady progress on our commitment: •In 2023, deployed more than 83,800 residential thermostats with a demonstrated capability of shedding more than 135 MW of energy. •In 2024, the Company expects to add 215 MW of utility-scale solar energy, 216 MW of wind energy, and more than 450 MW of energy storage. •By 2027, APS will seek to add more than 6,000 MW of solar and wind power, coupled with battery storage, which would provide the greatest long-term value and affordability to customers. •You can learn more about our Clean Energy Commitment at www.aps.com/cleanenergy.




			Coal Communities Transition
			The transition away from coal-fired power plants toward a clean energy future will pose unique economic challenges for the communities around these plants. We worked collaboratively with community leaders and stakeholders to propose a comprehensive Coal Communities Transition Plan. The proposed framework provides substantial financial and economic development support to build new economic opportunities and addresses a transition strategy for plant employees. We are committed to continuing our long-running partnership with the Navajo Nation in other areas as well, including expanding electrification and developing renewable projects on or near the Navajo nation. The ACC approved a portion of the plan in the 2019 rate case decision. No additional Coal Community Transition funding was approved in the 2022 rate case. As a result, funding to the Navajo Nation has already been provided in the amount of $11.51 million, and additional funding will be provided in the amount of $22.75 million from Pinnacle West and $5.83 million, which is the remaining portion of funding that was approved by the ACC in the 2019 rate case.



			Community Engagement
			At APS, we initiate and maintain relationships with stakeholders to understand our communities’ needs and identify opportunities to build healthy and sustainable communities. Our External Affairs team collaborates with representatives from a wide range of community and government entities, including: state, county, municipal and tribal governments; military bases; school districts; nonprofits; business organizations; and public interest groups to maximize existing resources to address important community issues and opportunities. In 2023, we hosted seven APS Energy Update meetings across our service area, with APS President Ted Geisler as the featured speaker. These meetings provided an opportunity to inform and educate stakeholders about our Company and have a direct exchange of ideas, perspectives, and gather feedback and concerns. In total, over 245 community leaders participated in these meetings, representing over 120 organizations in the nonprofit, government and private sectors.




			Philanthropy and Volunteerism
			We are actively involved in the communities we serve. We partner with nonprofit organizations and community groups across the state to build a stronger, healthier Arizona. Our efforts include financial support, board service, and volunteer assistance. We donated more than $10.2 million to worthwhile causes in 2023. This includes our Corporate Giving program, which funds organizations that contribute to the growth and prosperity of Arizona, with a focus on arts and culture, education and employment, small business and entrepreneurship, environment, human services, and community development. Giving back to our communities is an integral part of the APS culture, and our employees donate their time and talents to a wide range of charitable organizations and civic initiatives. In 2023, our employees volunteered an estimated 79,286 hours, both in-person and virtually, to causes important to them. Our employees sit on the boards of nearly 300 Arizona community and nonprofit organizations and industry groups. Employee engagement of this kind not only assists those organizations, but also produces valuable human capital development, as volunteerism increases loyalty, performance, and job satisfaction while providing employees with professional development opportunities. Other accomplishments for 2023 include: •employees pledged $2.1 million to the 2023 Community Service Fund campaign (United Way) with the Company matching 25%, for a total of $2.6 million; •for the sixth consecutive year, we supported Arizona teachers through our Supply My Class program, in which 500 Arizona K-12 teachers from 251 Title I schools received $500 each to purchase much-needed classroom supplies, all hand-delivered by an APS employee or officer for the first time since the program’s inception; •through our partnership with Earn to Learn, 238 new scholarships were awarded to low-to moderate-income, post-secondary students in the Phoenix and rural areas through a matched savings program; •in partnership with key nonprofit partners, we expanded our heat relief strategy aimed at expanding assistance to vulnerable individuals during Arizona’s hot summer months. In partnership with the Foundation for Senior Living, we provided 44 vulnerable, limited-income households served by APS with emergency air conditioning repair or replacement through the Healthy Homes Air Conditioning Program, an increase of 25% over last year and, through our partnership with Solari/211 and Lyft, we were able to provide residents with more than 600 rides to cooling sites; •through strategic APS grants, in partnership with St. Vincent de Paul, Phoenix Industrial Development Authority, and others, over 400 individuals received rent and utility assistance, 269 individuals from downtown Phoenix homeless encampments received emergency shelter, and another 500 individuals transitioned into supportive and affordable permanent housing; •we distributed nearly $55,000 through the Utilities Grant Program to maximize support of communities impacted by coal plant transitions; and •we continued our Community Tree Program aimed at increasing shade tree canopy cover in vulnerable communities, provided grants to 13 nonprofits, cities/towns and school districts, planting 386 desert-adapted shade trees.



Board Independence •Independent Lead Director role with clearly defined and robust responsibilities •Eight of our nine Director nominees are independent and the members of all of the Board committees are independent	Board Oversight •Robust management succession planning •Focused Board oversight of strategy and risk •Thorough CEO performance oversight process Board Performance •Annual Board, committee, and individual Director evaluations and discussions with the Lead Director •Director skills and experience necessary to provide oversight of our strategy and operations •Robust Board refreshment, with Director retirement policy	Shareholder Rights •A group of 15% of our shareholders can call a special meeting (“Shareholder Special Meeting Rights”) •Annual elections of all Directors with cumulative voting •No poison pill plan or similar anti-takeover provision in place •No supermajority provisions in our Articles of Incorporation or Bylaws •Proxy access rights allow up to 20 shareholders owning 3% of our outstanding stock for at least 3 years to nominate up to 25% of the Board



10	9	4	2	9.1 YEARS(1)
Directors	Independent	Women	Diverse Ethnicity	Average Tenure of Independent Directors
				5	1	3
				0-5 years	6-10 years	Over 10 years


Name		Occupation	Age(2)	Director Since	Independent	Committees
	Glynis A. Bryan	Chief Financial Officer, Insight Enterprises, Inc.	65	2020
	Gonzalo A. de la Melena, Jr.	Founder and Chief Executive Officer, Emerging Airport Adventures, LLC	55	2022
	Richard P. Fox	Independent Consultant and former Managing Partner, Ernst & Young	76	2014
	Jeffrey B. Guldner	Chairman of the Board, President and Chief Executive Officer of PNW and Chairman of the Board and Chief Executive Officer of APS	58	2019
	Kathryn L. Munro	Principal, BridgeWest, LLC	75	2000
	Bruce J. Nordstrom	Of Counsel and CPA, Nordstrom & Associates, P.C.	74	2000
	Paula J. Sims	Lead Director Retired Professor of Practice, University of North Carolina Kenan-Flager Business School, and Former Senior Vice President of Corporate Development and Improvement, Duke/Progress Merger	62	2016
	William H. Spence	Former Chairman and Chief Executive Officer, PPL Corporation	67	2021
	Kristine L. Svinicki	Former Nuclear Regulatory Commission (“NRC”) Chairman	57	2023
	James E. Trevathan, Jr.	Former Executive Vice President and Chief Operating Officer, Waste Management, Inc.	70	2018

Committees



High Standards			We look for individuals who set high standards and expectations for themselves and others and who demonstrate a commitment to accomplishing those standards and expectations.


Informed Judgment			Directors should be thoughtful in their deliberations. We look for individuals who demonstrate intelligence, wisdom, and thoughtfulness in decision-making. Their decision-making process should include a willingness to thoroughly discuss issues, ask questions, express reservations, and voice dissent.


Integrity and Accountability			Directors should act with integrity. We look for individuals who have integrity and strength of character in their personal and professional dealings. Our Directors should be prepared to be, and are, held accountable for their decisions.


Time and Effort			Directors need time to properly discharge their responsibilities as Directors, including reviewing written materials provided in advance of Board or committee meetings and attending and participating in those meetings. We look for individuals who are willing and able to commit this time to the Board. We also look for Directors who are willing to make themselves accessible to management upon request.


Other Commitments			We look for individuals who will monitor their other commitments to ensure that these other commitments do not impact their service to our Company. Our Directors may not serve on more than three other boards of public companies in addition to the Pinnacle West Board without the prior approval of the Corporate Governance and Public Responsibility Committee. Our Directors also may not serve as a member of the Audit Committee if he or she serves on the audit committees of more than three public companies (including the Company) unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the Company’s Audit Committee.



Board Size			The Corporate Governance and Public Responsibility Committee regularly assesses the appropriate size of the Board, including whether any vacancies on the Board are expected due to retirement or otherwise.


Board Knowledge, Skills, Expertise, and Diversity			The Corporate Governance and Public Responsibility Committee considers whether the Board reflects the appropriate balance of knowledge, skills, expertise, and diversity required for the Board as a whole. If the Corporate Governance and Public Responsibility Committee determines there are any gaps in the Board’s overall composition, it will focus its candidate search and recruiting efforts to address those gaps. In conducting a search, diversity is a consideration, utilizing a broad meaning that specifically includes race, gender, background, ethnicity, accomplishments, and other traits.


Sourcing Candidates			Candidates may be considered at any point during the year and brought to the attention of the Corporate Governance and Public Responsibility Committee through current Board members, members of management, professional search firms, or shareholders. In 2023, the Corporate Governance and Public Responsibility Committee engaged a professional search firm to assist in identifying candidates. The Corporate Governance and Public Responsibility Committee evaluates all nominees against the same criteria.


			2016 • Paula J. Sims added
			2018 • Roy A. Herberger, Jr. retired
			2018 • James E. Trevathan, Jr. added
			2020 • Glynis A. Bryan added
			2020 • Michael L. Gallagher retired
			2021 • William H. Spence added
			2021 • Humberto S. Lopez retired
			2022 • Gonzalo A. de la Melena, Jr. added
			2022 • Denis A. Cortese retired
			2023 • Kristine L. Svinicki added
			2023 • Dale E. Klein retired
			May 2024 • Kathryn L. Munro scheduled retirement



Our Board has been refreshed Since the adoption of our Director Retirement Policy, six independent Directors have been added and six Directors will have retired as of May 22, 2024. Our average independent Director tenure will have decreased from 12.3 years in May 2016 to 9.1 years as of March 14, 2024.



1	Board Evaluation Each Director completes a comprehensive written evaluation of Board (“Board Evaluation”) and committee performance, which is reviewed on a one-year, stand-alone basis and a three-year basis to identify year-over-year trends	Topics covered include, among others: •Board composition and effectiveness •Competency and accountability •Deliberations and administration •Committee effectiveness •Specific skills, experience, and expertise recommended by Directors to be added or enhanced


2	Director Self-Evaluation Each Director evaluates different areas of their performance as a Director (“Director Self-Evaluations”)	Topics covered include, among others: •Independence •Knowledge and expertise •Judgment and skills •Participation and contribution to collective decision-making


3	One-on-One Discussions Conducted by the Lead Director, who initially reviews the assessment results, in a formal annual call The Lead Director is prepared to have hard conversations, if necessary, to keep the Board, and each individual Director, functioning at a high level	Topics covered include, among others: •The Board, its functions, and membership •Board and committee structure •Processes for effective communication and feedback •Director’s plan with respect to continuing Board service •Any other topic the individual Director wishes to discuss


4	Evaluation Results	The results of the evaluations and calls are presented to the Corporate Governance and Public Responsibility Committee and the full Board each February


5	Feedback Incorporated	Based on the evaluation results, changes in practices or procedures are considered and implemented as needed



We employ a plurality voting standard with our Director Resignation Policy because we believe a majority voting standard is inconsistent with cumulative voting, which is mandated by the Arizona Constitution.



AUDIT COMMITTEE


“In a challenging and ever-changing environment, the Audit Committee members are committed to their obligation of effective oversight of the Company’s audit and financial management.” —Bruce Nordstrom 2023 Meetings: 6 Committee members: Bruce J. Nordstrom, Chair Glynis A. Bryan Gonzalo A. de la Melena, Jr. Richard P. Fox Kristine L. Svinicki Key member skills:			Responsibilities: •Oversees the integrity of the Company’s financial statements and internal controls; •Appoints the independent accountants and is responsible for their qualifications, independence, performance (including resolution of disagreements between the independent accountants and management regarding financial reporting), and compensation; •Monitors the Company’s compliance with legal and regulatory requirements; •Recommends to the Board that the Company’s audited financial statements be included in the Company’s annual report on Form 10-K; •Sets policies for the Company’s hiring of employees or former employees of the independent auditor; •Reviews and concurs in the appointment, replacement or dismissal of the Director of Audit Services; •Review and approves the internal audit plan and scope of internal audits; •Reviews the annual audited financial statements or quarterly financial statements, as applicable, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; •Discusses with management and the independent accountants significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements; •Reviews the Company’s draft earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; •Discusses guidelines and policies to govern the process by which risk assessment and risk management is undertaken across the Company and discusses the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures; and •Reviews management’s monitoring of the Company’s compliance with the Company’s Code of Ethical Conduct. The Board has determined that each member of the Audit Committee meets the NYSE experience requirements and that Mr. Nordstrom, the Chair of the Audit Committee, and Ms. Bryan are “audit committee financial experts” under applicable SEC rules. None of the members of our Audit Committee currently serve on more than three public company audit committees.



CORPORATE GOVERNANCE AND PUBLIC RESPONSIBILITY COMMITTEE


“The Committee continues to prioritize the board refreshment process taking into careful consideration experience, skills and expertise, gender, and ethnicity diversity.” —Paula Sims 2023 Meetings: 5 Committee members: Paula J. Sims, Chair Richard P. Fox Kathryn L. Munro Bruce J. Nordstrom William H. Spence James E. Trevathan, Jr. Key member skills:			Responsibilities: •Reviews and assesses the Corporate Governance Guidelines; •Develops and recommends to the Board criteria for selecting new directors; •Identifies and evaluates individuals qualified to become members of the Board, consistent with the criteria for selecting new directors; •Recommends director nominees to the Board; •Recommends to the Board who should serve on each of the Board’s committees; •Reviews significant environmental, social, and governance (“ESG”) trends that may impact the Company, ensuring the oversight of relevant ESG issues by the Board and its committees, and makes recommendations to the Board as appropriate; •Directly oversees climate change related issues and the Company’s strategies in response to those issues; •Reviews the Company’s public and social responsibility policies, strategy, and practices, and periodically reviews them with the Board; •Reviews the results of the Annual Meeting shareholder votes; •Reviews and makes recommendations to the Board regarding the selection of the CEO and succession planning for the CEO and senior management roles; •Reviews the Company’s Code of Ethical Conduct for compliance with applicable law; •Recommends a process for responding to communications to the Board by shareholders and other interested parties; •Reviews the independence of members of the Board and approves or ratifies certain types of related party transactions; •Reviews and makes recommendations to the Board regarding shareholder proposals presented for inclusion in the Company’s proxy materials; •Reviews and makes recommendations regarding proxy material disclosures related to the Company’s corporate governance policies and practices; •Periodically reviews principal risks relating to the Company’s corporate governance policies and practices or other matters addressed by the Corporate Governance and Public Responsibility Committee; •Oversees the Board and committee evaluations on at least an annual basis; and •Reviews and assesses the Company’s Political Participation Policy and then reviews the Company’s policies and practices with respect to governmental affairs strategy and political activities in accordance with that policy. The Corporate Governance and Public Responsibility Committee periodically reviews and recommends to the Board amendments to the Corporate Governance Guidelines and the Political Participation Policy. The Corporate Governance Guidelines and the Political Participation Policy are available on the Company’s website (www.pinnaclewest.com).



FINANCE COMMITTEE


“The Finance Committee is focused on the short- and long-term health of our Company. Our committee provides oversight of the Company’s financial performance, its capital allocation strategy, financing plans and capital structure, and our dividend strategy.” —James Trevathan, Jr. 2023 Meetings: 4 Committee members: James E. Trevathan, Jr., Chair Glynis A. Bryan Kathryn L. Munro Bruce J. Nordstrom William H. Spence Key member skills:			Responsibilities: •Reviews the historical and projected financial performance of the Company and its subsidiaries; •Reviews the Company’s financial condition, including sources of liquidity, cash flows, and levels of indebtedness; •Reviews and recommends approval of corporate short-term investment and borrowing policies; •Reviews the Company’s financing plan and recommends to the Board approval of: (a) the issuance (and permanent re-acquisition or redemption) of: (i) long-term debt, (ii) financing leases, or other arrangements incorporating the effective intent or purpose of providing any form of financing, (iii) common equity, and (iv) preferred securities; (b) the establishment of credit facilities; (c) certain equity infusions into subsidiaries; and (d) general parameters within which others may, pursuant to Board authority, establish terms and conditions relating to such securities or instruments. •Reviews the Company’s use of guarantees and other forms of credit support; •Reviews and monitors the Company’s dividend policies and proposed dividend actions; •Establishes and selects the members of the Company’s Investment Management Committee to oversee the investment programs of the Company’s trusts and benefit plans; •Reviews and discusses with management the Company’s process for allocating and managing capital; •Reviews and recommends approval of the Company’s annual capital budget; •Reviews the Company’s annual operations and maintenance budget; •Reviews the Company’s insurance programs; and •Periodically reviews principal risks relating to the Company’s policies and practices concerning budgeting, financing, credit exposures, or other matters addressed by the Finance Committee.



HUMAN RESOURCES COMMITTEE


“The Committee focused on our workforce, specifically addressing issues such as workforce recruitment, development and retention, pay equity, benefits, diversity and inclusion, and, together with the Corporate Governance and Public Responsibility Committee, succession planning.” —Rick Fox 2023 Meetings: 6 Committee members: Richard P. Fox, Chair Gonzalo A. de la Melena, Jr. Kathryn L. Munro Paula J. Sims James E. Trevathan, Jr. Key member skills:			Responsibilities: •Reviews management’s programs for the attraction, retention, succession, motivation, and development of the Company’s human resources needed to achieve corporate objectives; •Establishes the Company’s executive compensation philosophy; •Reviews and assesses the Company’s strategies and policies related to human capital management, including those with respect to matters such as diversity, inclusion, pay equity, corporate culture, talent development, and retention; •Recommends to the Board individuals for election as officers; •Annually reviews the goals and performance of the officers of the Company and APS; •Approves corporate goals and objectives relevant to the compensation of the CEO, assesses the CEO’s performance in light of these goals and objectives, and sets the CEO’s compensation based on this assessment; •Makes recommendations to the Board with respect to non-CEO executive compensation and Director compensation; •Administers the Company’s long-term incentive plans; •Reviews and discusses with management the Compensation Discussion and Analysis (“CD&A”) on executive compensation set forth in our proxy statements; •Reviews the number, type, and design of the Company’s pension, health, welfare, and benefit plans; •Periodically reviews principal risks relating to the Company’s compensation and human resources policies and practices or other matters addressed by the Human Resources Committee; and •Periodically reviews the Company’s compensation policies and practices applicable to executive and non-executive employees to identify and assess potential material risks arising from the policies and practices. Under the Human Resources Committee’s charter, the Human Resources Committee may delegate authority to subcommittees, but did not do so in 2023. Additional information on the processes and procedures of the Human Resources Committee is provided under the heading “Compensation Discussion and Analysis.”



NUCLEAR AND OPERATING COMMITTEE


“The Committee addressed a wide variety of critical issues, including safety, nuclear and non-nuclear generation, customer service, progress on clean energy goals, resource adequacy, operational reliability, and cybersecurity.” —William Spence 2023 Meetings: 4 Committee members: William H. Spence, Chair Glynis A. Bryan Gonzalo A. de la Melena, Jr. Paula J. Sims Kristine L. Svinicki Key member skills:			Responsibilities: •Receives regular reports from management and monitors the overall performance of PVGS; •Reviews the results of major PVGS inspections and evaluations by external oversight groups, such as the Institute of Nuclear Power Operations and the NRC; •Monitors overall performance of the principal non-nuclear business functions of the Company and APS, including fossil energy generation, energy transmission and delivery, customer service, fuel supply and transportation, safety, legal and regulatory compliance, key performance indicator results and trends, and any significant incidents or events; •Reviews regular reports from management concerning the Company’s environmental, health, and safety (“EH&S”) policies and practices, and monitors the Company’s compliance with such policies and applicable laws and regulations, and reviews and discusses with management how the Company can continue to improve its safety practices; •Reviews APS’s planning for resource adequacy (including generation additions and retirements) and significant expansions of its bulk transmission system; •Periodically reviews principal risks related to the Company’s nuclear, fossil generation, transmission and distribution, and EH&S operations, or other matters addressed by this Committee; •Receives reports on the Company’s sustainability initiatives and strategy; •Provides oversight of security policies, programs, and controls for protection of cyber and physical assets; and •Receives regular reports from the Off-Site Safety Review Committee — a committee of non-employee individuals with senior management experience in the nuclear industry and the Palo Verde Director of Nuclear Assurance that provides independent assessments of the safe and reliable operations of PVGS.



Focus on customer experience and community stewardship

Critical to our success is our ability to deliver value to our customers and build quality relationships with our stakeholders. We have an opportunity to improve the customer experience and strengthen our community stewardship by increasing our customer focus, investing in the community in new ways, and building on our sustainability objectives.


Support an evolving workforce

As our industry experiences social and economic change, employees continue to be the key differentiators of our success. We must plan and prepare to employ the workforce of the future in order to achieve long-term success. The creation of the APS Promise and a focus on cultural principles will allow us to drive innovation and create a sense of belonging for our employees.


Decarbonize and manage generation resources

National sentiment toward environmental and climate issues increasingly challenges our use of fossil resources and accelerates the transition to renewable and clean energy sources. APS must thoughtfully navigate these transitions to optimize our existing generation fleet, integrate customer-sited resources, and strategically invest in the clean energy fleet needed to meet our Clean Energy Commitment.


Achieve a constructive regulatory environment

As a regulated utility, our business outcomes are shaped by regulatory outcomes at the federal, state, and local level. This requires us to work from a strong foundation of trust and accountability, and to focus our engagements with the customer top of mind. We must continue to build from a long history of productive relationships and engagement to achieve our long-term objectives.



Ensure long-term financial health

We must keep rates affordable while meeting investor growth expectations and reliability goals. Investments that encourage an economically vital Arizona support our financial health and provide opportunities for new and diversified revenue streams, which will prove essential to our long-term success.