Principals play a central role in how well a school performs. They are responsible for establishing school goals and developing strategies for meeting them. They lead their schools' instructional programs, recruit and retain teachers, maintain the school climate, and allocate resources. How well they execute these and other leadership functions is a key determinant of school outcomes. Many districts are trying to create value-added measures for principals much like those they use for teachers. The idea is compelling, but the situations are not necessarily analogous. Estimating value-added for principals turns out to be even more complex than estimating value-added for teachers. Three methods have been suggested for assessing a principal's value-added. One method attributes all aspects of school effectiveness (how well students perform relative to students at other schools with similar background characteristics and students with similar peers) to the principal; a second attributes to the principal only the difference between the effectiveness of that school under that principal and the effectiveness of the same school under other principals; and a third attributes school improvement (gains in school effectiveness) to the principal. This document reviews each of these distinct methods and discusses the current state of knowledge, what more needs to be known, and what can't be resolved by empirical evidence on this issue.