Based on a synthesis of research and on telephone interviews with representatives of 22 school districts, this study analyzes the effectiveness and problems of two types of motivational plans for teachers: merit pay plans in which at least part of a teacher's pay is linked to performance, and nonmonetary performance-by-objectives plans in which performance targets are set for individual teachers and their performance is subsequently monitored. A prefatory summary lists overall findings and recommendations including directions for further research. Part I of the report consists of an introduction and additional chapters considering the objectives of merit pay plans, type and size of rewards, eligibility for merit pay, teacher evaluation methods, other incentive plan design issues, performance-by-objectives plans, issues arising after the plan has been put into operation, integrating the incentive plan with career ladder/master teacher plans, and the role of state governments. Part II presents 16 case reports on individual districts' merit pay plans and performance-by-objectives plans that incorporate plan description and evaluation and suggestions for successful implementation. (MJL)