I was reading about student teaching the other day, and a thought occurred to me: what happens to student teaching under performance pay schemes? If you were a teacher and your salary depended upon how many points your students gained on the state test this year, how willing would you be to a.) spend your time training a student teacher instead of helping your students, and b.) let a student teacher take charge of lessons in your classroom.
I don't see any way that test-based performance pay and student teaching can successfully coexist. If the teacher is motivated by the incentive being offered, then they're also going to be less willing to let a student teacher spend time with their class -- unless, of course, they're convinced that the student teacher is at least as good at teaching as they are. If they don't care about the incentive and they're not motivated by it, then they should be as willing as ever to let a student teacher take charge but the performance pay plan won't really be succeeding if it's not motivating teachers to do more and do better.
If performance pay is based on factors other than test scores, of course, then the dilemma can be dealt with.