Incentives to encourage teacher excellence for the purposes of teacher attraction, retention, improvement, and enhancement are examined in this report. Motivators involving monetary plans, career status, awards and recognition, professional responsibility, and workplace conditions are described, as well as the issues of cost, planning, and evaluation. Other topics covered are teacher evaluation--its purposes, plans implemented by other states, and its organizational impact--and developing a decision-making framework. Seven recommendations are made, some of which include matching the type of motivator with the intent of the incentive plan, consideration of a wide range of motivators built along a continuum, and encouragement of teacher feedback. One figure and an extensive bibliography are included. (LMI)