UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:
	Preliminary Proxy Statement
	Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(E)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material under §240.14a-12

PINNACLE WEST CAPITAL CORPORATION

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):
	No fee required.
	Fee paid previously with preliminary materials.
	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

		About Pinnacle West WHO WE ARE We are Pinnacle West Capital Corporation (“Pinnacle West,” “PNW” or the “Company”). We are an investor-owned electric utility holding company based in Phoenix, Arizona, with consolidated assets of about $23 billion. For more than 130 years, Pinnacle West, through our affiliates, has provided energy and energy-related products to people and businesses throughout Arizona. Our success enables us to reinvest in our home state’s growth and give back to our communities, enhancing Arizona’s continued economic and cultural vitality. Pinnacle West derives essentially all of our revenues and earnings from our principal subsidiary, Arizona Public Service Company (“APS”). APS is a wholly owned, vertically integrated electric utility that provides either retail or wholesale electric service to most of the state of Arizona. APS is also the operator and co-owner of the Palo Verde Generating Station — a primary source of clean electricity for the Southwest and the largest nuclear power plant in the United States. APS serves more than 1.3 million homes and businesses in 11 of Arizona’s 15 counties, and is a leader in delivering affordable, clean and reliable energy in the Southwest.

A Message from Our Chairman, President and CEO

“

In 2022 we continued to focus on our short- and long-term strategies, with particular emphasis on a recovery plan coming out of the last rate case. This included investing time and resources to improve the customer experience, rebuilding trust with our regulators through transparent and frequent communications, and creating value for shareholders by managing costs and deferring new equity issuances. I am proud of the progress made to date and look forward to new opportunities in the year ahead.”

 

Jeffrey B. Guldner

Chairman of the Board, President
and Chief Executive Officer

2023 Proxy Statement  |  i

knowledge, experience and skills bring crucial insights to developing near- and long-term goals and, ultimately, overseeing our progress in building a more sustainable energy future and creating customer and shareholder value. I want to thank the Board of Directors for their outstanding support in 2022.

One of our Directors, Dr. Dale Klein, will retire from the Board as of the 2023 Annual Meeting. We thank Dale for his many years of service. His deep knowledge of the nuclear industry and valued counsel on important issues facing our Company will be missed.

We are excited about the addition of Kristine Svinicki to the Board. As a former Chairman of the Nuclear Regulatory Commission, Kristine will bring deep knowledge and great insight to us as we operate Palo Verde Nucelar Generating Station, the largest nuclear power plant in the United States. I look forward to working with Kristine.

Finally, in February of 2023, the Board elected Paula Sims as the new Lead Director, starting in May of 2023. The transition of the position from Kathy Munro to Paula Sims is part of our plan to provide an orderly transition in light of Kathy’s scheduled departure from the Board in 2024. I want to personally thank Kathy for the excellect job she has done in the role of Lead Director. She has provided wisdom and counsel to the Board, to the management team and to our shareholders. Kathy will continue to serve on the Board and her committees until her retirement.

Sustainability

We continue to execute on our Clean Energy Commitment to provide 100% clean, carbon-free energy to customers by 2050, and we continue to evaluate ways to achieve that commitment through the promotion of supportive policies, economic advancement in our communities, innovative technologies in our industry, and collaboration with our stakeholders. You can read more about our progress on page 13 of this Proxy Statement.

Finally, your vote is important to us. Whether or not you plan to participate in the Annual Meeting, we encourage you to vote promptly. You may vote on the internet; by telephone; or by completing, signing, dating and returning a proxy card or voting instruction form.

Thank you for your investment and continued support of Pinnacle West.

 

Sincerely,

Jeffrey B. Guldner

Chairman of the Board, President
and Chief Executive Officer

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A Message from Our Lead Director

“

Our independent Board members are active, engaged and contributing members. Our discussions are detailed and focused on oversight of Pinnacle West’s and APS’s business strategies and the implementation of these strategies. The Board’s oversight and guidance seeks to make sure that Pinnacle West operates responsibly and efficiently and achieves long-term sustainable value for our fellow shareholders.”

Kathryn L. Munro

Lead Director

2023 Proxy Statement  |  iii

searches. The Corporate Governance and Public Responsibility Committee is responsible for identifying and recommending to the Board individuals qualified to become Directors. The Board believes that its membership should be composed of a combination of knowledge, skills, and experience in the following areas, among others: finance and accounting; business operations and strategy; leadership experience in large organizations; energy and utility industry; public policy and regulatory compliance; and risk oversight and risk management. The Board also believes that diversity, utilizing a broad meaning that includes race, gender, background, ethnicity, accomplishments, and other traits, is an important consideration in selecting candidates. Out of our eleven nominees, four are women and two are racially or ethnically diverse. Our Directors’ diverse skills and expertise are shown in the chart on page 17 of this Proxy Statement.

Sustainability

The Board also continued its focus on sustainability. Of particular interest to our shareholders is the Board’s oversight of climate change related issues. As such, we amended the Corporate Governance and Public Responsibility Committee’s Charter to specifically add oversight of climate change related issues. At the Committee’s meeting in October, the Committee engaged with management in a detailed discussion about various sustainability matters, including the Company’s water needs and the mega-drought.

On behalf of the Board, I thank our shareholders for their time and feedback. I am pleased to provide this window into the Board’s activities in 2022 and express our commitment to running our business for long-term value creation for you, our shareholders. We appreciate your support at our 2023 Annual Meeting.

 

Sincerely,

Kathryn L. Munro

Lead Director

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TABLE OF CONTENTS

A Message from Our Chairman, President and CEO

i

A Message from Our Lead Director

iii

Notice of the 2023 Annual Meeting of Shareholders

1

Proxy Statement Summary

3

The Value We Create

3

Financial Highlights

5

Customer Highlights

6

Employee Highlights

8

Our DEI Strategy: Key Areas of Focus

10

Environmental Highlights

12

Community Highlights

14

Governance Highlights

16

Board Highlights

17

Compensation Highlights

19

Information About Our Board and Corporate Governance

20

Director Nomination Process

20

Board Effectiveness

23

Board and Committee Structure

26

Board Oversight and Engagement

33

Director Nominees for the 2023 Annual Meeting

42

Proposal 1: Election of Directors

42

Director Nominees

44

Director Independence

55

Director Compensation

56

Executive Compensation

58

Proposal 2: Advisory Vote on Executive Compensation

58

Human Resources Committee Report

59

Compensation Discussion and Analysis (“CD&A”)

60

Executive Compensation Tables

88

Pay Ratio

109

Pay Versus Performance

110

Proposal 3: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation

115

First Amendment to the 2021 Long-Term Incentive Plan

116

Proposal 4: Approval of the First Amendment to the 2021 Long-Term Incentive Plan

116

Existing Equity Compensation Plans

125

Equity Compensation Plan Information:

125

Audit Matters

126

Proposal 5: Ratification of The Appointment of Deloitte & Touche LLP as the Independent Accountant for the Company

126

The Independent Accountant

126

Pre-Approval Policies

127

Audit Fees

128

Report of the Audit Committee

128

Stock Matters

129

Ownership of Pinnacle West Stock

129

Section 16(a) Beneficial Ownership Reporting Compliance

130

Deliquent Section 16(a) Reports

130

Shareholder Proposal

131

Proposal 6: Independent Board Chairman

131

General Information

134

Time, Date and Place

134

Notice of Internet Availability

134

Record Date; Shareholders Entitled to Vote

134

Voting

135

Quorum

136

Vote Required

136

Board Recommendations

137

Delivery of Annual Reports and Proxy Statements to a Shared Address and Obtaining a Copy

137

Shareholder Proposals for the 2024 Annual Meeting

138

Proxy Solicitation

138

Other Matters

139

Related Party Transactions

139

Human Resources Committee Interlocks and Insider Participation

140

Helpful Resources

141

Appendix A: First Amendment and 2021 Long-Term Incentive Plan, as amended

142

First Amendment to the 2021 Long-Term Incentive Plan

142

2021 Long-Term Incentive Plan, as amended

143

Appendix B: Rules of Conduct for the Pinnacle   West Capital Corporation Annual Meeting of Shareholders

165

INDEX OF FREQUENTLY REQUESTED INFORMATION
Auditor Fees	128
Beneficial Ownership Table	129
Board Evaluations	25
Board Leadership	26
CEO Pay Ratio	109
Clawback Policies	84
Code of Ethics	35
Company Culture	33
Compensation Consultant	69
Corp. Gov. Guidelines	20
Director Attendance	33
Director Independence	55
Director Biographies	44
Director Skills Matrix	43
Director Tenure	17
ESG Framework	34
Financial Highlights	5
Human Capital Management	35
Lead Director Duties	26
Management Succession	39
Named Executive Officers (“NEOs”) for 2022	60
Pay Versus Performance	110
Peer Group	71
Perks	83
Related Party Transactions	139
Risk Oversight	36
Stock Ownership Guidelines	84
Strategic Plan	33
Succession Planning	39

 

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Notice of the 2023 Annual Meeting of Shareholders

VOTING ITEMS
1.	To elect eleven Directors to serve until the 2024 Annual Meeting of Shareholders
		FOR each Director nominee
2.	To hold an advisory vote to approve executive compensation
		FOR
3.	To hold an advisory vote on the frequency of our shareholders advisory votes on executive compensation
	1	YEAR
4.	To approve the first amendment to Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan
		FOR
5.	To ratify the appointment of our independent accountant for the year ending December 31, 2023
		FOR
6.	To act upon a shareholder proposal requesting adoption of a policy separating the chairman and CEO roles and requiring an independent Board Chairman whenever possible, if properly presented at the 2023 Annual Meeting of Shareholders
		AGAINST
Your vote is important. Whether you plan to participate in the Annual Meeting or not, please promptly vote by telephone, over the Internet, by proxy card, or by voting instruction form. By order of the Board of Directors,   Diane Wood Corporate Secretary April 5, 2023   The Proxy Statement and form of proxy are first being made available to shareholders on or about April 5, 2023.

May 17, 2023
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 17, 2023 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 10, 2023, 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)

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Proposals to be Voted Upon

Proposal		Board Recommendation			Page Reference
1. Election of Directors The Board of Directors and the Corporate Governance and Public Responsibility Committee believe that the eleven 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		42
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		58
3. Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation The Company believes that an annual advisory vote on the compensation of our Named Executive Officers, as defined on page 60 of this Proxy Statement, is in the best interests of our shareholders.		1	YEAR		115
4. Approval of the First Amendment to the Pinnacle West Capital Corporation 2021 Long-Term Incentive Plan (the “2021 Plan”) We are asking the Company’s shareholders to approve an amendment (the “First Amendment”) to the 2021 Plan to: (i) increase the maximum number of shares of the Company’s common stock authorized for issuance over the term of the 2021 Plan, (ii) change the time-based vesting of restricted stock and restricted stock units subject to the five percent limitation from three years to one year; and (iii) extend the term of the 2021 Plan to June 1, 2033, unless terminated earlier by the Board. We are not making any other changes to the 2021 Plan.			FOR		116
5. Ratification of the Appointment of Deloitte & Touché LLP (“D&T”) as the Independent Accountant 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 accountant is in the best interest of the Company and its shareholders.			FOR		126
6. A Shareholder Proposal A shareholder proposal requesting the adoption of a policy separating the chairman and CEO roles and requiring an independent Board Chairman whenever possible, if properly presented at the 2023 Annual Meeting of Shareholders.			AGAINST		131

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Proxy Statement Summary

The Value We Create

 

	The APS Promise		Our Strategy
Our Purpose As Arizona stewards, we do what is right for the people and prosperity of our state. Our Vision Create a sustainable energy future for Arizona. Our Mission Serve our customers with clean, reliable and affordable energy.		How we will execute our mission to achieve our vision.
		Long-term issues and priority areas of focus for our business over the next ten years: • focus on customer experience and community stewardship; • support an evolving workforce; • decarbonize and manage generation resources; • achieve a constructive regulatory environment; and • ensure long-term financial health.
	Our Principles
The culture and behaviors that will enable us to fulfill our purpose, vision and mission.   Design for Tomorrow See the Way Forward Innovate with Courage Value Learning   Empower Each Other Embrace Diverse Perspectives Challenge Respectfully Unite as One Team   Succeed Together Create Clarity Anchor in Safety Deliver for the Community		Strategies and Goals Actions and targets that guide resources and efforts to address our long-term issues:   Business Plan — defines how each business unit executes our strategy.   Performance Ambitions — defines the enterprise wide priorities across both “run” and “change” the business activities over a five-year period.   Tiered Metrics — provides a clear look at what the Company is trying to accomplish by measuring what matters.   Performance Management — recognizes and rewards the individual contributions to priority work.

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The Value We Create for Our Stakeholders

	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 5,800 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 8
	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 concepts. 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 12
	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 14

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Financial Highlights

Shareholder Value

Our management team is committed to increasing shareholder value as one of our top priorities. In 2022, we faced significant financial challenges, resulting from an unfavorable rate case decision implemented in December 2021. That decision by the ACC led the Company to reset its financial outlook. In response to the decision, we committed to minimizing shareholder impact by deferring equity issuances, managing costs and capital allocation and sustaining dividend growth. These efforts, combined with favorable weather and higher than expected sales growth, resulted in our total shareholder return (“TSR”) to be 13.1% in 2022. In addition, we filed a new rate case with the ACC in late October 2022. The $460 million proposal is structured to meet customer needs by ensuring grid reliability and resiliency. An affirmative decision would improve our return on equity, enable us to strengthen the electric grid and support Arizona’s growing demand for energy. We anticipate further clarity around the regulatory environment in Arizona and look forward to continuing discussions regarding the execution of our Clean Energy Commitment and growth profile. We are committed to continuing to cultivate robust communication and collaboration with the ACC and other stakeholders to find constructive solutions that support our customers while maintaining the financial health of our Company. We believe we have the right strategy and team in place to meet our near-term goals and deliver long-term shareholder value.

* Value of $100 invested as of December 31, 2017, with dividends reinvested.

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2022 Financial and Operating Highlights

Customer Highlights

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 best-in-class customer experience. This multi-year objective includes incrementally improving our J.D. Power and Associates (“JDP”) residential and business customer satisfaction ratings from the fourth- to the first-quartile of our peer set. We made extraordinary progress on that front in 2022.

Compared to 2021, APS made quartile gains in every single driver of residential customer satisfaction, firmly lifting the Company into the second quartile nationally. Consequently, overall residential customer satisfaction is now well above industry benchmarks when compared to the Company’s large investor-owned peers. APS’s strongest performing drivers for the year were customer care (phone and digital), power quality and reliability, corporate citizenship, and billing and payment.

Additionally, JDP’s business 2022 full-year results place the Company in the first-quartile of utilities nationally for business customers.

As a result, our employees’ commitment and focus has led to APS being among the most improved utilities in the nation for both residential and business customer satisfaction.

Customer Care Center

Our customers can contact us anytime — day or night — through our 24/7 Customer Care Center. In 2022, our call center performed at industry leading service levels with associates answering 77% of more than one million calls in 30 seconds or less. We also experienced growth in online transactions and engagements through both English and Spanish digital customer platforms. Through our website and mobile app, customers completed 30 million-plus transactions and engagements in 2022.

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Customer Advisory Board

Formed in 2020 and made up of a cross-section of residential customers, this group met half a dozen times in 2022 to inform the Company of customer needs, wants and perspectives on a variety of topics, including rate plan selection, billing and payment alerts, value for price insights and outage experience. The Customer Advisory Board’s input helped shape communications to customers, as well as our thinking on related program development.

	Customer Experience Strategy Council
	In 2021, we initiated an organization-wide customer experience strategy council designed to further drive a customer-oriented culture and improve JDP performance. Through this and other ongoing initiatives, we improved our customers’ experiences in 2022 by: • continuing empathy and knowledge training for care center advisors, and introducing easy-to-use functionality for our automated phone system; • creating more flexible payment arrangements, as well as introducing new customer payment channels, including Amazon Pay, PayPal and Venmo; • simplifying our financial assistance process for customers and community partner agencies, thus significantly increasing the number of customers and financial support provided; • implementing numerous aps.com enhancements, including improving page-loading speeds, adding user-friendly dashboards and simplifying content; • enhancing functionality of our online outage center, and auto-enrolling more than 1 million customers for outage email and text notifications; and • launching a broad-reaching, multi-channel communications campaign focused on messages that matter most to our customers — reliability, energy-efficiency, financial assistance, the environment, and programs that enable customers to design their own personalized energy experience.

Limited Income Offerings

We have assistance programs that provide discounts to qualified limited-income customers, as well as programs to help customers stay current on their bills. And, to ensure our most vulnerable customers are connected to these programs, we train and work 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 $800 a year to cover current or past due APS bills through the Crisis Bill Assistance program. APS provides $2.5 million in annual funding for Crisis Bill Assistance. • Energy Support. Funded at about $33 million in 2022, our Energy Support program gives qualified, limited-income customers a 25% discount on their bill each month. • Project Share. This program encourages our customers and employees to make tax-deductible contributions through their monthly electric bills and employee paychecks, respectfully. In addition, we match employee contributions dollar-for-dollar. All contributions are then administered by the Salvation Army to help limited-income customers 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.

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Employee Highlights

Our more than 5,800 dedicated employees strengthen our Company with their skills, experience and diverse perspectives. Human capital measures and objectives that the Company focuses on in managing its business include the safety of its employees, diversity and inclusion, succession planning, hiring and retention of talent, compensation and benefits and employee engagement.

	Focused on Our People
	The 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: 54 virtual summer internships in 2022, 63% of whom were diverse based on race, ethnicity, or gender • Apprentice programs: 131(1) apprentices in the programs, 27 of whom were hired for the programs in 2022 • Incoming engineer programs: New Engineers in Operations Program (Generation); Legacy Engineer Program (PVGS); Rotational Engineer Program (Transmission and Distribution) • Enhanced talent analytics and insights: Launched tools for deeper insights in our applicant data, open position management, and employee demographics • Strong commitment to our communities: Implemented 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 10 Employee Network Groups (see page 11 of this Proxy Statement) • Average employee tenure of 12.57 years due to strong talent strategy and an engaged workforce • Total turnover for 2022 was 11% (3.6% of which were related to retirements) • Annual 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 include enterprise-wide initiatives focused on improving communication between employees and management, removing obstacles that prevent job success, providing opportunities for employees to have more access to leadership, and improved meeting efficiency   Development and Succession Planning • Graduated 138 employees from our leadership academies in 2022 • Annual and ongoing succession planning conversations support successor talent identification, development, and transition • Our Learning and Development organization was recognized as a top training organization, earning an APEX Award from Training Magazine for the 3rd year in a row • Supported our modern learning culture by continuing to offer on-demand learning to our leaders and program participants who collectively completed over 9,700 development modules • Empowered 30 director-level leaders through an Advancing Strategic Foresight program to develop 5 future scenarios leveraged by the officer team for future planning

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	Diversity, Equity, and Inclusion (“DEI”)
	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)   • 35% are ethnically or racially diverse • 26% are female • 15% are veterans
			• We are a couple of years into the DEI Strategy that we launched in 2021. Key activities in 2022 included: • bringing inclusive leadership education to the business unit leadership teams and covering topics such as cultural competence and unconscious bias; • developing and launching a DEI self-paced module for all employees, explaining how cultural competence drives inclusion of diverse groups; • conducting cultural competence assessments with our inclusion council groups; and • holding listening sessions with employees to learn about what matters most to them.
	New hires in 2022:
	• 44% were ethnically or racially diverse • 40% were female • 7% were veterans
	39% of all officers are female(1)   18% of all officers are ethnically or racially diverse

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Our DEI Strategy: Key Areas of Focus

Alignment & Accountability			Workforce Evolution			Leveraging Connections
	DEI Education and Dialogue — Create experiential learning to ensure alignment around relevant concepts across the organization			Talent Acquisition — Analyze and evolve current recruiting and selection processes to improve external diverse hiring			Employee Network Groups — Evolve our ENGs to increasingly serve as business resources over time
	DEI Governance and Influence — Build governance structure to ensure alignment and accountability			Talent Development, Performance and Succession — Assess existing talent processes to ensure equity and improve diverse representation among leadership			Employee Communication and Events — Visibly demonstrate our commitment to diversity, expose employees to different cultures and perspectives and recognize key occasions
	DEI Analytics — Extract data-driven insights to shape our DEI approach and monitor progress through meaningful measures			Workforce Development — Explore our current activities and create clarity and ownership for developing talent pipelines to create a diverse workforce for the future			Internal Partnerships — Partner with key internal stakeholder groups to ensure an integrated and aligned approach
	Policies and Practices — Assess and revise internal policies and practices to ensure equity						External Partnerships and Recognition — Partner with external organizations to benchmark, innovate, and be recognized for our DEI efforts

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Employee Network Groups

To encourage employees to challenge themselves, develop additional skills and advance within their chosen fields, the Company supports 10 employee networks that enable employees to connect with one another and promote career development:

		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.
		Next Gen’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.

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Environmental Highlights

Through our Clean Energy Commitment we are dedicated to providing clean, reliable and affordable electricity in order to achieve a sustainable future for our Company and our customers.

	Recognition
	• Energy Star Partner of the Year for Energy Efficiency Program Delivery. Over the past year, APS continued to promote energy efficiency with offerings across multiple program areas, while managing demand and reducing lifetime carbon dioxide emissions by 2.3 billion pounds. • Pinnacle West maintained its “AA” rating from MSCI (as of February 14, 2023). • On the list of Top 100 Green Utilities from Energy Intelligence for the fourth year in a row.
	Energy Innovation
	APS is in the midst of one of the greatest periods of change in our Company’s 130-plus year history. • 2,400 MW of renewable capacity today • Plan to add at least 2,500 MW of additional clean energy technologies, including solar and storage, by 2025					Our 10 grid-scale solar plants are powered by more than 1 million solar panels
	Reducing Water Consumption
	Operating in the water-constrained Southwest desert, APS is challenged to maximize our use of water resources: • 34% reduction(1) in groundwater use in 2022 • 71% of water consumed by APS power plants in 2022 came from treated effluent water
	Projected Conservation of Non-Renewable Water Supplies:
	2025				2035
	50%		79%		80%		95%
	groundwater reduction(1)		use of treated effluent water		groundwater reduction(1)		use of treated effluent water

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APS Clean Energy Commitment

Our Commitment: 100% Clean Energy by 2050 We’ve set a bold, three-part goal to provide a clean energy future for our customers: • a 2030 target of achieving a resource mix that is 65% clean energy, with 45% of the generation portfolio coming from renewable energy; • a 2031 commitment to end APS’s use of coal-fired generation; and • a 2050 goal to provide 100% clean, carbon-free electricity.   A Clean Economic Future • Our clean energy plan will be guided by sound science and focused on achieving environmental and economic gains — all while maintaining affordable, reliable service for our customers • Collaboration with customers, regulators and other stakeholders is key to our plan’s ultimate success. We look forward to working alongside those who believe in this vision to move forward together to keep Arizona clean, beautiful and thriving   Pathways to 100% Clean					Clean Energy Pathway
	Policy Decisions		Electrification
	Support policy decisions that leverage market-based technology and innovation to attract investment in Arizona		Electrification will drive a cleaner environment and more energy-efficient operations throughout the economy
	Existing Power Sources		Modernization of the Electric Grid
	Near-term use of natural gas until technological advances are available to maintain reliable service at reasonable prices		Continue to advance infrastructure that is responsive and resilient while providing customers more choice and control
	Evolving Market-Based Solutions		Energy Storage Solutions
	Participation in the Energy Imbalance Market (“EIM”) provides access to clean energy resources while saving customers money		Storage creates opportunities to take advantage of midday solar generation and better respond to peak demand

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Community Highlights

Our multifaceted approach to community engagement is grounded in our commitment to community development. We not only invest in the communities where we do business but also focus on building meaningful relationships, which help us manage our social, economic and environmental impact.

We use a variety of communication channels to develop dialogue in our communities, such as open houses, community summits, business forums and other special events. These enable us to gather feedback from participants, inform them about issues that affect their communities and APS, and identify issues and opportunities for action. We also develop strategic partnerships in areas such as diversity, inclusion and workforce development to advance social and economic goals.

	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 tribal renewable projects. The ACC approved a portion of the plan in the 2019 rate case decision, and we have requested approval of the remainder in our current rate case application.
	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 November 2022, APS hosted a Community Partnership Summit where 85 community leaders attended, representing 72 of our key partnership organizations. These relationships are one important way we collect, record and address feedback so that we work together to address concerns. In addition, the ACC has a grievance process for our customers.

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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 $14.7 million to worthwhile causes in 2022. This includes our corporate giving program, which funds organizations that contribute to the vitality of Arizona with a focus on arts and culture, civic and economic development, education and employment, and human services.  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 2022, our employees volunteered an estimated 83,587 hours of time, both in-person and virtually, to causes important to them.  Our employees sit on the boards of nearly 300 Arizona community organizations, 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 2022 include: • employees pledged $2.1 million to the 2022 Community Service Fund campaign (United Way) and with the Company matching 25%, a total of $2.6 million was donated; • for the fifth consecutive year, we supported Arizona teachers through our Supply My Class awards program, in which 1500 Arizona K-12 teachers from 357 schools received $500 each to purchase much-needed classroom supplies; • through our partnership with Earn to Learn, 238 new scholarships were awarded to low-to moderate income 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, including, in partnership with the Foundation for Senior Living, we provided 33 APS vulnerable customers with emergency air conditioning repair or replacement through the APS Healthy Homes AC Pilot Program; • in partnership with St. Vincent de Paul, we provided rent and utility assistance to 157 households and 391 individuals; and • we launched our Community Tree Program aimed at increasing shade tree canopy cover in vulnerable communities. We provided grants to 17 nonprofits, cities/towns and school districts to support the planting of 880 desert-adapted shade trees.

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Governance Highlights

Our strong corporate governance practices demonstrate the Board’s commitment to enabling an effective structure to support the successful execution of our strategic priorities.

Compensation Governance

Average shareholder support for our executive compensation program over the past five years has exceeded 94%

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Board Highlights

Name		Occupation	Age(2)	Director Since	Independent	Committees
	Glynis A. Bryan	Chief Financial Officer, Insight Enterprises, Inc.	64	2020
	Gonzalo A. de la Melena, Jr.	Founder and Chief Executive Officer, Emerging Airport Adventures, LLC	54	2022
	Richard P. Fox	Independent Consultant and former Managing Partner, Ernst & Young	75	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	57	2019
	Dale E. Klein, Ph.D.	Professor, Walker Department of Mechanical Engineering, Cockrell School of Engineering, The University of Texas at Austin	75	2010
	Kathryn L. Munro	Lead Director Principal, BridgeWest, LLC	74	2000
	Bruce J. Nordstrom	Of Counsel and CPA, Nordstrom & Associates, P.C.	73	2000
	Paula J. Sims	Consultant	61	2016
	William H. Spence	Former Chairman and Chief Executive Officer, PPL Corporation	66	2021
	Kristine L. Svinicki	Former Nuclear Regulatory Commission (“NRC”) Chairman	56	2023
	James E. Trevathan, Jr.	Former Executive Vice President and Chief Operating Officer, Waste Management, Inc.	69	2018
	David P. Wagener	Managing Partner, Wagener Capital Management	68	2014
Committees

Audit

Human Resources

Corporate Governance and Public Responsibility

Nuclear and Operating

Finance

Financial Expert

Chair

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Directors’ Key Skills and Experience

DIVERSITY

Gender or Ethnicity

FINANCE AND ACCOUNTING

Audit Expertise

Finance/Capital Allocation

Financial Literacy and Accounting

Investment Experience

BUSINESS OPERATIONS AND STRATEGY

Business Strategy

Complex Operations Experience

Corporate Governance

Customer Perspectives

Extensive Knowledge of Company’s Business Environment

Sustainability

LEADERSHIP EXPERIENCE IN A LARGE ORGANIZATION

CEO/Senior Leadership

Public Board Service

Human Capital Management

THE COMPANY’S INDUSTRY

Nuclear Experience

Utility Industry Experience

PUBLIC POLICY AND REGULATORY COMPLIANCE

Government/Public Policy/Regulatory

RISK OVERSIGHT AND RISK MANAGEMENT

Risk Oversight and Risk Management

n Board Leadership

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Compensation Highlights

Our compensation program is designed to be transparent and has a clear emphasis on putting pay at risk. Our executive compensation philosophy centers on the core objectives of maintaining alignment with shareholder interests and retaining key management.

The Company believes that a significant portion of each NEO’s total compensation opportunity should reflect both upside potential and downside risk. As shown below, we place a strong emphasis on performance-based, shareholder-aligned incentive compensation.

For 2022, the Company’s core executive compensation program for our NEOs consisted of the following key components⁽¹⁾:

	Pay Element	Measurement Period	Performance Link	Description
	Cash	Salary is based on experience, performance and responsibilities and is benchmarked to a peer group and market survey data to align with competitive levels.
	Cash	1 year	Earnings CEO: 50.0% Other NEOs: 50.0%	Universal measure of business financial performance; encourages achievement of bottom-line earnings growth goals.
			Business Unit Performance 50.0%	Pre-established operational business unit performance goals that include safety, customer experience and operational quality and efficiency metrics.
	Performance Shares 70%	3 years	Relative TSR 40%	Links pay to key measures generating shareholder value relative to others in the industry.
			EPS Performance 40%	Links pay to key measures generating shareholder value and financial targets.
			Clean Megawatts Installed 20%	Links pay to our Clean Energy Commitment.
	Restricted Stock Units 30%	Vest ratably over 4 years	Stock Price	Encourages retention; value dependent upon share price appreciation and four-year vesting to encourage retention.
	We provide benefits, including pension and deferred compensation programs, change of control agreements and limited perquisites, that are designed to attract and retain our executive talent.
(1) For additional details on our executive compensation program for our NEOs, see page 67 of this Proxy Statement.

CEO AND OTHER NEOs’ TOTAL COMPENSATION

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Information About Our Board and Corporate Governance

Director Nomination Process

Director Qualifications

The Bylaws and the Corporate Governance Guidelines contain Board membership criteria. Under the Bylaws, a Director must be a shareholder of the Company. The Corporate Governance and Public Responsibility Committee is responsible for identifying and recommending to the Board individuals qualified to become Directors. The Board believes its members should collectively have knowledge, skills, and experience in the areas discussed below.

Skills and Experience Possessed by Our Director Nominees

Finance and Accounting

As a publicly traded company subject to the rules of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”), and because we operate in a complex and highly regulated financial environment, we require strong financial, accounting and capital allocation skills and experience.

Business Operations and Strategy

As a large organization with complex operations, our Board must have a comprehensive combination of skills and experience in business operations and strategy in order to guide the development of our near- and long-term operational and strategic goals, and make sure they are sustainable, which requires knowledge about the Company, our business environment and our customers’ perspectives.

Leadership Experience in a Large Organization

Leadership experience in a large organization, at both the management and director level, provides Directors with the ability to effectively oversee management in setting, implementing and evaluating the Company’s strategic objectives for long-term financial and operational sustainability as well as providing invaluable experience in developing, implementing and maintaining the policies and practices for managing an effective workforce.

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The Company’s Industry

Having an understanding of both the utility industry and the nuclear industry is important to understanding the challenges we face as we develop and implement our business strategy.

Risk Oversight and Risk Management

Operations in our industry require the development of policies and procedures that allow for the oversight of and effectively manage risk.

Public Policy and Regulatory Compliance

Operating in the heavily regulated utility industry, we are directly affected by public policy and the actions of various federal, state and local governmental agencies.

Personal Qualities of our Directors

The Board believes that diversity, utilizing a broad meaning that specifically includes race, gender, background, ethnicity, accomplishments, and other traits, is an important consideration in selecting candidates. We require our outside director search firm to make diversity a focal point of any of our searches, with an emphasis on women and ethnically diverse candidates. Additionally, each Director should possess the following core characteristics:

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Nominees for the Board

The Corporate Governance and Public Responsibility Committee uses a variety of methods to identify and evaluate the need for nominees and the selection of nominees for a director position:

Other than Ms. Svinicki, all the Directors were elected at the 2022 Annual Meeting of Shareholders. Mr. Guldner recommended Ms. Svinicki to the Corporate Governance and Public Responsibility Committee. In recruiting Ms. Svinicki, the Corporate Governance and Public Responsibility Committee retained Spencer Stuart to perform a background check on Ms. Svinicki. Ms. Svinicki was interviewed by the Corporate Governance and Public Responsibilty Committee and then by the full Board. The Corporate Governance and Public Responsibility Committee recommended Ms. Svinicki for Board membership, and she was added to the Board in February of 2023.

Shareholder Recommendation of Board Candidates for the 2024 Annual Meeting

Shareholder nominations for a director to the Board must be received by the Corporate Secretary at the address set forth below by November 24, 2023 (“Shareholder Nomination”):

Corporate Secretary
Pinnacle West Capital Corporation
400 North Fifth Street, Mail Station 8602
Phoenix, Arizona 85004

Proxy Access

Our Bylaws provide, among other things, that under certain circumstances a shareholder or group of shareholders may include director candidates that they have nominated in our annual meeting proxy statement — “proxy access.” Under these provisions, a shareholder or group of up to 20 shareholders seeking to include director nominees in our annual meeting proxy statement must have owned 3% or more of our outstanding common stock continuously for at least the previous three years. Generally, the number of qualifying shareholder-nominated candidates the Company will include in its annual meeting proxy materials will be limited to the greater of 25% of the Board or two candidates. Based on the current Board size of 12 Directors, the maximum number of proxy access candidates we would be required to include in our proxy materials is three.

Nominees submitted under the proxy access provisions that are later withdrawn or are included in the proxy materials as Board-nominated candidates will be counted in determining whether the 25% maximum has been reached. If the number of shareholder-nominated candidates exceeds 25%, each nominating shareholder or group of shareholders may select one nominee for inclusion in our proxy materials until the maximum number is met. The order of selection would be determined by the amount (largest to smallest) of shares of our common stock held by each nominating shareholder or group of shareholders. Requests to include shareholder-nominated candidates under proxy

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access must be received by our Corporate Secretary at the address set forth above not earlier than the close of business on November 7, 2023, nor later than the close of business on December 7, 2023. The number of qualifying shareholder-nominated candidates the Company will include in its proxy materials under proxy access will be reduced on a one-for-one basis in the event the Company receives a Shareholder Nomination, but at least one qualifying shareholder-nominated proxy access nominee will be included in the proxy materials.

In all cases, shareholders and nominees must comply with the applicable rules of the SEC and the applicable sections of our Bylaws relating to qualifications of nominees and nominating shareholders and disclosure requirements.

Board Effectiveness

Board Refreshment Planning

Our Board has developed a robust plan to refresh the Board and its leadership significantly over the next several years. The plan is designed to continue to provide for a well-qualified, diverse and highly independent Board, with the requisite experience and skills to provide effective oversight. Among other things, this plan calls for regularly identifying the current key skills and experience possessed by our members and conducting a comprehensive Board evaluation. This process provides visibility into the skills and experience leaving our Board in the future and helps us identify additional skills, experience or expertise needed to facilitate the Company’s long-term strategy. The Corporate Governance and Public Responsibility Committee takes this information into account when identifying director nominees during the recruitment process.

Director Retirement Policy

Our Board first adopted a Director Retirement Policy in 2016 that was based solely on a person’s age at the time of election. In February 2020, we reevaluated and amended that policy to add a term limit to the age limit. The revised policy provides that an individual will not be eligible to be nominated for election or re-election as a member of the Board if, as of the commencement of the term for which they are nominated, such Director will have completed 12 years of service to the Board or attained 75 years of age. We also added a provision that will allow the Board, if it determines that it is in the Company’s best interest, to extend the term limit to up to 15 years for a particular nominee, so long as the average tenure of the overall Board is less than 10 years. We believe this combination of both a term and age limit provides for regular and thoughtful board refreshment.

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Although the Board is committed to the revised Director Retirement Policy, we believed it was advisable to implement it on a gradual basis. The Board was concerned about the rate of retirements under the age-only policy. Under the age-only policy, we would have experienced multiple years with more than one member scheduled to retire. We believed that it was in the best interests of the Company to better stagger these retirements. To that end, we created a transition period that slowed the immediate turn-over rate, but provided a bridge to full implementation of the final policy. Through and until the 2024 Annual Meeting of Shareholders, an individual may not be eligible for nomination for election or re-election to the Board unless, as of the commencement of the term for which they are nominated, the individual will have completed 12 years of service to the Board and attained 75 years of age. The revised policy and the transition period will apply regardless of the source of a nomination and whether the nomination was made by the Board of Directors or by one or more shareholders.

Directors added or retired since the adoption of our Director Retirement Policy:

	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
	February 2023 • Kristine L. Svinicki added
	May 2023 • Dale E. Klein scheduled retirement

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Board Evaluations

The Board has implemented a rigorous annual evaluation process that enables the Board to assess the overall functioning of the Board as a whole, and identify any skills, experience or expertise needed to continue to provide effective oversight of the Company’s long-term strategy. This process also allows the Board to identify any areas of concern, both with respect to the Board overall and with respect to individual performance.

Our Board Evaluation Process

Each year, the Corporate Governance and Public Responsibility Committee reviews the Board and Director Self-Evaluations as well as the evaluation process itself to determine whether any changes are necessary. This annual review is shared with, and recommendations are solicited from, the full Board. As performance issues are identified, they are addressed by the Lead Director and the Chairman of the Board (the “Chairman”) as needed.

Director Onboarding

Upon election to the Board, all new Directors attend a Director orientation program tailored to each Director based on their past individual experience. After Mr. de la Melena was elected to the Board, he received detailed information and materials about our Company, business and operations. He attended an orientation that took place over several days and included meetings with management from multiple business units, and presentations on topics of significance to the Company and our industry. A similar orientation is planned for Ms. Svinicki.

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Director Education

Directors are provided with continuing education opportunities both within the Company and externally. In addition to the Company-hosted educational opportunities provided, Directors are invited to attend Palo Verde Off-Site Safety Review Committee meetings that typically occur two times per year, and Directors are encouraged to attend a variety of industry and board-related symposia and conferences throughout the year. Additionally, Directors are permitted to participate in other educational opportunities relevant to the Company.

Director Resignation Policies

The Company’s Bylaws provide that in an uncontested election, a director nominee who receives a greater number of votes cast “withheld” for his or her election than “for” such election must promptly tender his or her resignation to the Corporate Governance and Public Responsibility Committee. The Corporate Governance and Public Responsibility Committee is required to evaluate the resignation, taking into account the best interests of the Company and its shareholders, and will recommend to the Board whether to accept or reject the resignation.

Under the Company’s Corporate Governance Guidelines, if there is a substantial change in a Director’s primary business position from the position the Director held when originally elected to the Board, the Director must apprise the Corporate Governance and Public Responsibility Committee and offer his or her resignation. The Corporate Governance and Public Responsibility Committee will recommend to the Board the action, if any, to be taken with respect to the tendered resignation.

Board and Committee Structure

The Board’s Leadership Structure

Lead Director

Kathryn L. Munro currently serves as the Company’s Lead Director and chairs the Corporate Governance and Public Responsibility Committee. As noted in the letters from Mr. Guldner and Ms. Munro, the Board voted in February to change the Board member serving as Lead Director effective in May of 2023. This change is part of an orderly transition in connection with Ms. Munro’s scheduled retirement from the Board in May of 2024. Ms. Munro is now scheduled to step down from the role of Lead Director in May of 2023. Ms. Paula Sims is scheduled to assume the role of Lead Director at that time.

With respect to Ms. Munro, as a former chief executive with significant Board and Chair and Lead Director experience, she has the competence and capability to fulfill the duties of Lead Director. As Lead Director, Ms. Munro guides the Board during these transformative times. Ms. Munro is independent and vigorously carries out the duties of the Lead Director. Ms. Munro makes sure the Directors are focused, are encouraged to offer different points of view, and maintain their independence from management.

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The Lead Director performs the following duties and responsibilities as set forth in our Corporate Governance Guidelines:

This list of duties and responsibilities does not fully capture Ms. Munro’s active role in serving as our Lead Director. For example, Ms. Munro has regular discussions with the CEO, other members of the senior management team and members of the Board between Board meetings on a variety of topics. Ms. Munro focuses the Board on key issues facing our Company and on topics of interest to the Board. She takes the lead on director recruitment and has a formal annual call with each non-employee Director to discuss the Board, its functions, its membership, the individual’s plan with respect to their continuing Board service, and any other topic the individual wishes to discuss with our Lead Director. Her leadership fosters a Board culture of open discussion and deliberation to support sound decision-making. She also encourages communication between management and the Board to facilitate productive working relationships.

Chairman and CEO

Upon promoting Jeff Guldner to the position of CEO, the Board also chose to elect him as Chairman of the Board. The Board believes the Company is in a better position to implement its near- and long-term strategies if the Chairman is also the person directly responsible for the operations executing those strategies. The Board further believes that separating the roles of the CEO and Chairman and appointing an independent Board Chairman at this time would create an additional level of unneeded hierarchy that would only duplicate the activities already vigorously carried out by our Lead Director.

The independent Directors believe that Mr. Guldner, with his extensive knowledge of the challenges facing the Company and our industry and his open leadership style, is a highly effective conduit between the Board and management and that Mr. Guldner provides the vision and leadership to execute on the Company’s strategy and create shareholder value without the need for an independent chair. The Board convenes regularly scheduled executive sessions of the independent Directors in order to ensure the independent Directors can speak candidly and openly without the presence of management.

For further information about our Lead Director, duties, and whether the Board believes an independent Board Chair would be in the best interests of our shareholders, please see our Statement of Opposition to the Shareholder Proposal starting on page 131 of this Proxy Statement.

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Board Committees

The Board has five standing committees: Audit; Corporate Governance and Public Responsibility; Finance; Human Resources; and Nuclear and Operating. All the charters of the Board’s committees are publicly available on the Company’s website (www.pinnaclewest.com). All of our committees conduct a formal review of their charters every other year and as often as any committee member deems necessary. In the years in which a formal review is not conducted, the Board has tasked management with reviewing the charters and recommending any changes management deems necessary or reflective of good corporate governance. The charters are also changed as needed to comply with any changes to any applicable rule or regulation.

All of our committees are composed of entirely independent Directors who meet the independence requirements of the NYSE rules, SEC rules, and the Company’s Director Independence Standards, including any specific committee independence requirements. The duties and responsibilities of our committees are described below:

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Board Meetings and Attendance

In 2022, our Board held eight meetings. All of our Directors attended at least 85% of the Board meetings and any meetings of Board committees on which they served. Each Director is expected to participate in the Annual Meeting. All Board members attended the 2022 Annual Meeting except for Ms. Svinicki, who was not a Director at that time.

Board Oversight and Engagement

Company Culture

In 2020, the Company launched the APS Promise anchoring our commitment to our customers, community, and each other. The Promise explains why we’re here (our purpose), what we’re here to do (our vision and mission), and the principles and behaviors that will empower us to achieve our strategic goals. It represents the opportunity to build on our cultural strengths and develop new behaviors that will enable our future success. The Board receives reports on the Company’s culture, the APS Promise, and progress on our principles.

Strategic Plan

Our strategic plan identifies five long-term strategic issues that are priority focus areas for the business to address over the next ten years. Our plan keeps our eye on the future even as we navigate the dynamic present:

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Our Board reviews the development of the strategic business plan and oversees the implementation of that strategy, receiving regular reports from management on progress and any changes throughout the year. The Board, through the Human Resources Committee, is also involved in setting the annual performance metrics, which are aligned with the strategic plan and designed to incentivize achievement of the strategic goals.

Environmental, Social and Governance (“ESG”)

APS has been integrating ESG practices into its core work for almost 30 years. As a business strategy, we seek to establish shared value — addressing environmental, societal and governance challenges in a way that also delivers business value. We believe that the best way to solve these challenges is to work collaboratively to create a clean and sustainable energy future for Arizona. As part of the value creation, we are committed to strong governance practices by building trust through transparency throughout the organization and at the Board level.

To demonstrate the heightened attention on ESG, the Corporate Governance and Public Responsibility Committee has the responsibility to review significant ESG trends that may impact the Company, ensure the oversight of relevant ESG issues by the Board and its committees, and make recommendations to the Board, as appropriate. In early 2023, the Corporate Governance and Public Responsibility Committee charter was amended to include oversight of climate change related issues and the Company’s strategies in response to those issues. Another key focus of the Board is the adoption and maintenance of good governance practices, which is a primary responsibility of the Corporate Governance and Public Responsibility Committee.

The full Board also dedicates a significant amount of time to ESG matters. As an electric utility, environmental matters are at the forefront of our discussions on operations, strategy and risk. The Nuclear and Operating Committee has primary responsibility over operational environmental practices. Our social impact, within the Company, in our community and with our customers, is overseen by the Corporate Governance and Public Responsibility and Human Resources Committees.

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In support of our Clean Energy Commitment and the growing role of ESG in our organization, we formed a Sustainability department that is dedicated to integrating environmental, social and governance best practices into the everyday work of APS. Its fundamental purpose is to drive our performance and enhance our reputation as a responsible corporate citizen. The department reports to the Vice President of Sustainability, who reports directly to our Senior Vice President of Public Policy.

In addition, an ESG Executive Council was established to guide the Company’s development of a common, cross-functional ESG vision, ensuring alignment and integration with the corporate strategic framework. The ESG Executive Council also has oversight of ESG reporting and implementation and is responsible for measuring and reporting on the actions taken to reach our Clean Energy Commitment.

The Company also established a framework for the Social Issues Committee. The goal of the framework is to provide a process for considering emergent social issues, and for determining whether or how best to engage on these important issues.

Human Capital Management

Human capital measures and objectives that the Company focuses on in managing its business include the safety of its employees, diversity and inclusion, succession planning, hiring and retention of talent, compensation and benefits and employee engagement. In 2022, the Human Resources Committee had oversight of the Company’s strategies and policies related to human capital management, including those with respect to matters such as diversity, inclusion, and talent development and retention. The Human Resources Committee is also tasked with oversight of the Company’s workforce, including establishing the Company’s executive compensation philosophy and reviewing the Company’s plans and programs for the attraction, retention, succession, motivation, and development of the human resources needed to achieve corporate objectives. The Human Resources Committee also reviews the Company’s pension, health, welfare and benefit plans and is responsible for the oversight of risks relating to or arising out of the Company’s compensation and human resources policies and practices. The Board generally has multiple opportunities each year to interact directly with employees, including during our annual Board meeting at PVGS, during an annual dinner with select employees, and at employee-driven presentations to the Board.

Codes of Ethics

To ensure the highest levels of business ethics, the Board has adopted the Code of Ethical Conduct, which applies to all employees, officers and Directors, and the Code of Ethics for Financial Executives, both of which are described below:

Code of Ethical Conduct (“Code of Ethics”)

Employees, Directors and officers receive access to the Code of Ethics when they join the Company or APS, as well as periodic updates. The Code of Ethics helps ensure that employees, Directors and officers of the Company and APS act with integrity and avoid any real or perceived violation of the Company’s policies and applicable laws and regulations. The Company provides annual online training covering the principles in the Code of Ethics. This training includes extensive discussion of the Company’s principles, an explanation of Company ethical standards, application of ethical standards in typical workplace scenarios, information on reporting concerns, assessment questions to measure understanding, and an agreement to abide by the Code of Ethics. All active employees of the Company, APS and our subsidiaries and all of our Directors complete the training.

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Code of Ethics for Financial Executives

The Company has adopted a Code of Ethics for Financial Executives, which is designed to promote honest and ethical conduct and compliance with applicable laws and regulations, particularly as related to the maintenance of financial records, the preparation of financial statements, and proper public disclosure. “Financial Executive” means the Company’s CEO; Chief Administrative Officer; Chief Financial Officer; Chief Accounting Officer; Controller; Treasurer; Vice President, Financial Planning; and General Counsel; the APS President; and other individuals designated from time to time as a Financial Executive subject to the Code of Ethics for Financial Executives by the Chair of the Audit Committee.

Both codes are available on the Company’s website (www.pinnaclewest.com).

The Board’s Role in Risk Oversight

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Responsibilities

Responsibility for managing the Company’s risks rests with the Company’s senior management team. The Board’s oversight of the Company’s risk management function is designed to provide assurance that our risk management processes are well adapted to and consistent with the Company’s business and strategy and are functioning as intended.

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Highlights of Certain Risks

Two of the top risks monitored by the Board and its committees in 2022 were as follows:

Ability to Attract & Retain Top Talent

The Company is increasingly challenged to attract and compete for top talent in a market where its competitors are no longer other utilities, but all other industries and markets on a national scale. Arizona business growth, including key segments of engineering and technology, coupled with soaring real estate prices in Arizona, also exacerbate an already challenging talent market. A deep adoption of remote work throughout the country has created hyper-talent mobility of critical knowledge workers. Employees have an expectation of a culture of remote work, career growth and flexibility. These expectations create a risk of losing talented and vital knowledge workers, who may seek employment elsewhere with more upward mobility, or more flexible work options.

Main components of the mitigation strategy include:

Responsibility for oversight of this risk was allocated to the Human Resources Committee.

Supply Chain Constraints

The Company is increasingly dependent on third parties for a variety of both core and peripheral goods and services. This risk is exacerbated by global supply chain constraints particularly for processors, solar panels and critical raw materials for battery manufacturing. Additionally, given the 2019 rate case outcome there is increasing risk of regulatory oversight into the procurement process to ensure the Company will successfully recover costs associated with necessary plant repairs and upgrades in addition to technology upgrades to meet the Clean Energy Commitment. The Company is diligently executing risk evaluations in the cyber space, but an increased dependence on contract labors, particularly in the information technology space, is requiring the Company to balance availability and costs against risk exposure related to onboarding third parties and outside vendors. Main components of the mitigation strategy include:

Responsibility for oversight of this risk was allocated to the Nuclear and Operating Committee.

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Management Succession

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Shareholder Engagement

We have an established engagement program to maintain a dialogue with our shareholders throughout the year. Each year we strive to respond to shareholder questions in a timely manner, conduct extensive proactive outreach to investors, and evaluate the information we provide to investors in an effort to continuously improve our engagement.

Shareholder Outreach			Board Access
	In 2022, we contacted the holders of approximately 70% of the shares outstanding		Our Board is focused on shareholder feedback. Our Lead Director and other members of the Board, depending on the topic to be discussed, have participated in shareholder discussions, providing shareholders with direct access to the Board.
Matters Discussed in our Fall 2022 Outreach
• Our strategy • Our performance • Our Clean Energy Commitment		• Board refreshment • Our employees • Executive compensation		• Customer experience • Diversity, equity and inclusion
We Listen to our Shareholders
What our shareholders think is important to us. We want to ensure we have the opportunity to engage directly with our shareholders. We seek to maintain a transparent and productive dialogue with our shareholders. Each year we take feedback from our shareholders, ESG rating agencies and organizations, and other stakeholders to ensure our strategy and focus align with the interests of our shareholders and community.
Board Responsiveness
In response to feedback we’ve received, we improved shareholder rights by decreasing the number of shares required to call a special meeting of shareholders from 25% to 15%, refined our executive compensation program to further align pay-for-performance — as detailed in the CD&A — and we announced our bold aspiration to serve customers with 100% clean, carbon-free energy by 2050. In addition, we set an interim target to achieve 65% clean, carbon-free energy and 45% renewables by 2030. We also revised our performance share metrics to add a new clean megawatts installed metric.   In 2019, 2020 and 2022, we received a shareholder proposal with respect to the shareholder special meeting right. In 2019, the proposal was rejected by a margin of 7.2%, in 2020, the proposal was rejected by a margin of 22.88%, and in 2022, the proposal was rejected by a margin of 29.25%. As part of our shareholder outreach program, we discussed the topic with our shareholders to get a better understanding of their preferences with regard to the threshold to calling a special meeting. As a result of these discussions, we found that there was no consensus from our shareholders as to what they believed the proper threshold should be, though a majority of them did not believe that 10% was the proper threshold, as reflected in the vote results each year the proposal was presented.

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Annual Engagement Cycle

SPRING		SUMMER		FALL		WINTER
We publish annual communications to our shareholders: Annual Report, Proxy Statement, and Corporate Responsibility Report. We reach out to our shareholders and discuss proxy-related topics in connection with our Annual Meeting held in May.		We review the results of the Annual Meeting and potential improvements to our governance policies and practices.		We reach out to our shareholders in order to discuss the Annual Meeting outcome and to understand their priorities for the year. We communicate shareholder feedback to the Board and use it to enhance our governance practices, our disclosures and our sustainability and compensation programs.		The cycle concludes with the Board considering our shareholders’ feedback and determining whether to implement items in response.

Communicating with the Board

Shareholders and other parties interested in communicating with the Board, the independent Directors or with the Lead Director may do so by writing to the Corporate Secretary, Pinnacle West Capital Corporation, 400 North Fifth Street, Mail Station 8602, Phoenix, Arizona 85004. The Corporate Secretary will transmit such communications, as appropriate, depending on the facts and circumstances outlined in the communications. In that regard, the Corporate Secretary has discretion to exclude communications that are unrelated to the duties and responsibilities of the Board, such as commercial advertisements or other forms of solicitations, service or billing matters and complaints related to individual employment-related actions.

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Director Nominees for the 2023 Annual Meeting

Proposal 1: Election of Directors

The eleven nominees for election as Directors are set forth on the next page. All nominees will be elected for a one-year term that will expire at the 2024 Annual Meeting. The Directors’ ages are as of February 22, 2023. All of our Directors also serve as Directors of APS for no additional compensation.

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Director Nominees’ Key Skills and Experience

DIVERSITY
Gender or Ethnicity
FINANCE & ACCOUNTING
Audit Expertise
Finance/Capital Allocation
Financial Literacy and Accounting
Investment Experience
BUSINESS OPERATIONS AND STRATEGY
Business Strategy
Complex Operations Experience
Corporate Governance
Customer Perspectives
Extensive Knowledge of Company’s Business Environment
Sustainability
LEADERSHIP EXPERIENCE IN A LARGE ORGANIZATION
CEO/Senior Leadership
Public Board Service
Human Capital Management
THE COMPANY’S INDUSTRY
Nuclear Experience
Utility Industry Experience
PUBLIC POLICY AND REGULATORY COMPLIANCE
Government/Public Policy/Regulatory
RISK OVERSIGHT AND RISK MANAGEMENT
Risk Oversight and Risk Management
■ Board Leadership

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Director Nominees