Key practices of effective performance mgmt. for the Senior Exec. Service (SES) include the linkage of ¿line of sight¿ between individual performance & organizational success, the importance of linking pay to individual & organizational performance, & the need to make meaningful distinctions in performance. The author identified certain principles for exec. pay plans that should be considered to attract & retain the quality & quantity of exec. leadership necessary to address 21st cent. challenges, incl. that they be sensitive to hiring & retention trends; reflect knowledge, skills, & contributions; & be competitive. This testimony focuses on the VA process for awarding bonuses to SES members, the amount & percentage of bonuses awarded for FY2004-2006. Ill.