Performance-based compensation in education is not a new concept, but to date it has failed to gain widespread momentum. Recent competitive application federal grants, including the latest round of Teacher Incentive Fund grants, will continue to keep the spotlight on this important and still controversial issue. Why the relative lack of momentum? Is there a future for performance-based compensation in education? How can reform-oriented districts use compensation as a responsible and effective complement to a comprehensive human capital strategy? This brief paper offers our perspectives on those questions based on our experience in the field.