PINNACLE WEST CAPITAL CORP

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the CD&A beginning on page 61 of this Proxy Statement.

(1)The dollar amounts reported in this column are the amounts of total compensation reported for Mr. Guldner (our CEO also known as the Principal Executive Officer (“PEO”)) for each corresponding year in the “Total” column of the Summary Compensation Table.

(2)The dollar amounts reported in this column represent the amount of “compensation actually paid” to Mr. Guldner, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Guldner during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Guldner’s total compensation for each year to determine the compensation actually paid:

(a)The grant date fair value of equity awards represents the amount reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year.

(b)The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in the fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The amounts deducted or added in calculating the equity award adjustments are as follows:

(c)The amounts included in this column are the amounts reported in the “Change in Pension and Nonqualified Deferred Compensation” column of the Summary Compensation Table for each applicable year.

(d)The total pension benefit adjustments for each applicable year include the aggregate of two components: (i) the actuarially determined service cost for services rendered by Mr. Guldner during the applicable year (the “service cost”); and (ii) the entire cost of benefits granted (or credit for benefits reduced) in a plan amendment (or initiation) during the applicable year that are attributed by the benefit formula to services rendered in periods prior to the plan amendment or initiation (the “prior service cost”), in each case, calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The amounts deducted or added in calculating the pension benefit adjustments are as follows:

(3)The dollar amounts reported in this column represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. Guldner, who has served as our CEO since 2019) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Guldner) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Andrew D. Cooper, Theodore N. Geisler, Adam C. Heflin, and Robert E. Smith (ii) for 2022, Theodore N. Geisler, Andrew D. Cooper, Adam C. Heflin, Maria L. Lacal, Robert E. Smith, and Jacob Tetlow; (iii) for 2021, Theodore N. Geisler, James R. Hatfield, Maria L. Lacal, and Robert E. Smith; and (iv) for 2020, James R. Hatfield, Theodore N. Geisler, Daniel T. Froetscher, Maria L. Lacal, and Robert E. Smith.

(4)The dollar amounts reported in this column represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Guldner), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Guldner) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Guldner) for each year to determine the compensation actually paid, using the same methodology described above in footnote 2:

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(a)The amounts deducted or added in calculating the total average equity award adjustments are as follows:

(b)The amounts deducted or added in calculating the total pension benefit adjustments are as follows:

(5)Cumulative TSR, as required by Item 402(v) of Regulation S-K, is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period.

(6)Cumulative peer group TSR, as required by Item 402(v) of Regulation S-K, is calculated using the same methodology used in calculating the Company’s cumulative TSR. Further, in calculating the peer group cumulative TSR, the returns of each component issuer is weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: EEI Index.

(7)The dollar amounts reported represent the amount of net income reflected in PNW’s audited financial statements for the applicable year, as required. For further details, see Consolidated Statements of Income in the Pinnacle West/APS Annual Report on Form 10-K for fiscal year ended December 31, 2023.

(8)Adjusted APS earnings (“APS Adjusted Earnings”) is APS earnings calculated in accordance with GAAP, as adjusted for purposes of the annual incentive plans, as follows: (i) for the APS 2020 Annual Incentive Award Plan and the APS 2020 Annual Incentive Award Plan for Palo Verde Employees, APS earnings were adjusted from $568.0 million to $587.7 million due to an accrual for the Coal Communities Transition Plan that was required under the accounting rules but that related to a future expense; (ii) for the APS 2021 Annual Incentive Award Plan and the APS 2021 Annual Incentive Award Plan for Palo Verde Employees, APS earnings were not adjusted; (iii) for the APS 2022 Annual Incentive Award Plan and the APS 2022 Annual Incentive Award Plan for Palo Verde Employees, APS earnings were not adjusted; and (iv) for the APS 2023 Annual Incentive Award Plan and the APS 2023 Annual Incentive Award Plan for Palo Verde Employees, APS earnings were adjusted from $547.3 million to $555.6 million due to a budget correction to a tax allocation that was made within the Pinnacle West consolidated group of companies.

Financial Performance Measures

As described in greater detail in the CD&A, the Company’s executive compensation program is designed to be transparent with a clear emphasis on putting pay at risk and retaining key executives. The metrics that the Company uses for both our long-term and short-term incentive awards emphasize putting pay at risk and aligning our executives interests with those of our shareholders. The most important performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance, are as follows:

•APS Adjusted Earnings

•Relative TSR

•Stock price

•Capital spend

•Operations and maintenance spend

•Customer satisfaction

•Safety

Analysis of the Information Presented in the Pay Versus Performance Table

As described in more detail in the CD&A, the Company’s executive compensation program reflects a pay-at-risk philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay Versus Performance table. Moreover, the Company does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay Versus Performance table.

Compensation Actually Paid and Cumulative TSR

As demonstrated by the following graph, the calculated amount of compensation actually paid to Mr. Guldner and the average of the calculated amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Guldner) is reflective of increases in the calculation of compensation actually paid for Mr. Guldner, which in turn reflects increases of certain compensation components tied to his growth into the position of Chairman of the Board, President and Chief Executive Officer of the Company, and modest increases year-over-year in the calculation of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Guldner) as compared to year-over-year changes in the Company’s TSR. With respect to the year-over-year changes in the TSR, we note that the 2021 TSR was adversely impacted by the 2019 rate case decision and the 2023 TSR was affected in part by market dynamics. As discussed in the CD&A, coming out of our 2019 rate case decision, we took action to recover from the impacts of that decision and are making solid progress on our strategic plan. Although our TSR went down between 2022 and 2023, we outperformed the EEI Index performance. The Company believes that the negative TSR was attributable in part to the fact that utilities were the worst performing sector in 2023, largely due to negative sentiment associated with rising interest rates and inflationary pressures. The Company does not use cumulative TSR in its executive compensation program, but does use relative TSR in the performance share grants as discussed in more detail in the CD&A. TSR impacts our compensation program in two ways — the actual stock price increases and decreases impacts the value of the equity awards and the relative TSR performance metric drives whether a portion of the overall equity grant pays out and to what degree.

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Compensation Actually Paid and Net Income

As demonstrated by the following graph, the calculated amount of compensation actually paid to Mr. Guldner and the average of the calculated amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Guldner) is reflective of increases in the calculation of compensation actually paid for Mr. Guldner, which in turn reflects increases of certain compensation components tied to his growth into the position of Chairman of the Board, President and Chief Executive Officer of the Company, and modest increases year-over-year in the calculation of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Guldner) as compared to year-over-year changes in the Company’s net income. The decline in net income in 2022 is primarily due to no longer deferring costs relating to our Four Corners selective catalytic reduction equipment and the Ocotillo Power Plant modernization project as a result of the unfavorable 2019 rate case decision. Net income in 2023 was favorably impacted in part by warmer than expected weather and an appellate court decision that reversed recovery of a portion of the deferred cost referenced above. However, net income in 2023 continued to be impacted by the 2019 rate case decision. Although we don’t use net income in our executive compensation program, we do use earnings in the 2023 Incentive Plans, as discussed below.

Compensation Actually Paid and APS Adjusted Earnings

As demonstrated by the following graph, the calculated amount of compensation actually paid to Mr. Guldner and the average of the calculated amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Guldner) is reflective of increases in the calculation of compensation actually paid for Mr. Guldner, which in turn reflects increases of certain compensation components tied to his growth into the position of Chairman of the Board, President and Chief Executive Officer of the Company, and modest increases year-over-year in the calculation of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Guldner) as compared to year-over-year changes in APS Adjusted Earnings. With respect to APS Adjusted Earnings we note that the 2022 earnings were reflective of the decrease in APS rates as a result of the 2019 rate case, and the impacts of the disallowance described on page 5 of this Proxy Statement. APS Adjusted Earnings for 2023 reflect higher revenues from warmer than expected weather, including record-breaking temperatures with 55 days over 100 degrees and also reflect in part the appellate court decision that reversed recovery of a portion of the disallowance. APS Adjusted Earnings is used in the 2023 Incentive Plans and represents 50% of the payout opportunity under those plans. Although Mr. Guldner’s payout opportunity is tied to Pinnacle West earnings, APS earnings account for a significant portion of Pinnacle West earnings, and is therefore a significant part of Mr. Guldner’s opportunity.

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Cumulative TSR of the Company and Cumulative TSR of the Peer Group

The Company believes the decline in the cumulative TSRs was due in part to the fact that utilities were the worst performing sector in 2023; however, as demonstrated by the chart below, our 2023 TSR only declined by approximately 1.2% compared to the cumulative TSR of the EEI peer group, which declined by 10.2%. Pinnacle West’s TSR from 2019 through 2021, compared to the EEI, declined largely due to investor concerns over the regulatory climate in Arizona while an APS rate case was pending. For more information regarding the Company’s performance and the companies that the Human Resources Committee considers when determining compensation, refer to the CD&A.

Value of $100 Invested as of December 31, 2019, with Dividends Reinvested