Here's what I remember:
The district's minimum salary was raised $5K (and it was a competitive salary to begin with). Anyone who was on a higher step got that 5K bump as well, but everybody was then "frozen" on whatever step on the salary schedule they were on (for me, that was step 14). Stipends remained in place as well as daily rates for 11 & 12 month contracts.
There were items that if the teacher completed them during the course of the year, the teacher got the bump in pay listed for that item in the policy for the next year. One could realistically bump up their pay $3000 for the next year.
Nowhere in the school's merit pay policy were test scores mentioned (or for us, ratings). The school was more concerned about teachers doing more professional development, getting their masters, etc.
Whatever merit pay you earned over the year was added to your frozen step level. So the next year I was Step 14 + $3000 + band director stipend + daily rate for 11 month contract. The next year you added to that, and so on. So it was very possible to bump up your salary by $9K in three years.
If you left the district, of course you never get to collect on the merit pay you earned your last year there. Even though you were "frozen" on a salary step (for me 14), the district still updated our service records so that if/when someone left the district they would be on the correct step in their new district (for me it was step 17).
This is how the district I was in did things...I am sure there are as many variations of merit pay systems as there are fingerprints. My advice is to stay informed on how your district wants to do things, and then make your decision based on that.