This study will examine principals' attitudes concerning the impact of the new performance pay plans on principals' relationships with their teachers and how these plans impact their schools. This study will explore principals' perceptions of performance pay, thus providing information to school policy stakeholders, policymakers, teachers, and school principals to help in the design of effective performance pay plans and compensation reform efforts. This research examined from the perspective of the principals their belief that the plan actually increases the ability of the teacher to improve academic achievement, help recruit and retain teachers, and that the plan is beneficial in modifying teacher motivation. This research used a quantitative design for an online survey (see Appendix D) to collect responses from middle school principals in the state of Florida. A fairly diverse group of 289 Florida middle school principals responded to the survey. Gender was closely divided between males and female principals and aligned very closely with Florida's whole principal population. The largest number of responding principals was Caucasian (55%); next were African Americans, who comprised (33%), with Hispanics representing (8%) and other ethnic group comprised (33%). Principals comprised (42%) of those who took the survey, while (53%) were assistant principals. The response rate of the total population sampled (1,938 Florida middle school principals) was (0.15%). The power of the survey was calculated to be robust at the 0.05 confidence level. To meet this alpha confidence level for statistical significance, 284 responses were needed. Efforts to improve student academic achievement have a long history. Current efforts are now being directed toward basing teachers' pay on their ability to improve students' learning. These new efforts reflect legislation on teachers' performance pay, adopted legislation by Florida. This legislation is viewed as a means to help recruit effective teachers and retain them in the profession while improving student learning. With many teachers retiring and many leaving the profession due to low morale, low pay, high stress levels, and unfavorable working conditions, more American citizens understand the need to have a high academic achievement level of students, so Americans can compete in an increasingly complex world both economically and humanistically. In addition, many citizens are beginning to support the need of teachers to receive higher pay. Increasingly policymakers are using performance pay as the answer to these new demands. Against this background, this study undertook the task of discerning middle school principals' perceptions of performance pay by examining the following research questions: Is the current performance pay system in use in Florida fair and equitable? Does the performance pay system help to retain effective teachers? Is the current teachers' performance pay plan helpful in recruiting effective teachers, and foremost, does it lead to increased student academic performance? The results of this study indicate that Florida middle school principals do not believe the teachers' performance pay plan is well designed. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]