Distinctions between levels of professional teaching skills are made in this paper, which illustrates the interdependent relationships among teaching, learning, and the effects upon teacher compensation. Performance pay for teachers is discussed, specifically career ladders that call for the evaluation of teaching performance as a factor in compensation, incentives, and career advancement. Evaluation criteria and methods are examined in terms of the differentiation between proficiency levels. Examples of teacher assessment criteria and five expertise levels on two selected criteria from the comprehensive teacher evaluation system are demonstrated. The interdependency between student learning and teacher skill is illustrated and the compensation effects of each are described. (LMI)