There is little doubt that teacher quality is a key determinant of student achievement, but finding ways to identify and reward the best teachers has proven illusive. This research brief considers the stability of value-added measures of teacher effectiveness over time and the resulting implications for the design and implementation of performance-based teacher compensation schemes. In a companion policy brief, Dan Goldhaber and Mike Hansen explore the long-run stability of value-added measures and the associated implications for tenure policies. In contrast, this brief focuses on the stability of value-added measures over shorter time spans, across school districts, and over test instruments and considers the implications of teacher effect stability for the design and implementation of performance-based teacher compensation schemes. (Contains 3 tables, 2 figures, and 6 notes.)