This report follows the state’s common usage and uses the term “strategic compensation” to refer to all pay plans that differ from the traditional model. Within the broad category of strategic compensation are (1) bonuses, or variable pay, and (2) alternative salary schedules that change the basis for base pay progression (salary increases). Districts can adopt strategic compensation in the form of bonuses, while still using the traditional salary schedule for annual salary increases. The report focuses on alternative salary schedule plans, explaining how they differ from traditional salary schedules, why more districts are experimenting with them, the distinctions between base pay and bonus pay components, what the research says, and current efforts in Tennessee to implement alternative salary schedules. Although districts that adopt strategic compensation for teachers commonly revise pay policies for principals and assistant principals as well, the focus of this brief is on teacher compensation.