Few NBA players mature as quickly as Derrick Rose did. The Bulls point guard captured the MVP award at the age of 22 in just his third NBA season, and he did so on a contract that paid him $5,546,160 that year, far below his market value. He was, in a sense, the victim of poor timing as he produced such outstanding results while still on the restrictive rookie wage scale for first-round picks, but his eligibility for an extension just as the lockout hit gave the players association an unusual chance to bargain on his behalf.

The result is a stipulation, commonly known as the Derrick Rose rule, that allows a player on a rookie-scale contract to receive an extension with a starting salary of up to 30% of the salary cap instead of the standard 25% if he hits certain benchmarks. A former first-round pick can invoke the rule if he does any of the following while his rookie-scale contract is in effect:

Win the MVP

Make an All-NBA team twice

Make the All-Star Game as a starter via fan balloting twice

The rule also applies to former second-round picks and undrafted players with at least four years of service, but the odds that any of them would meet one of the required benchmarks are slim.

Rose, with his MVP award in tow, signed his lucrative five-year extension with the Bulls in December 2011, shortly after the lockout ended. Still, he wasn’t the first to benefit from the rule named after him. The league decided to apply the rule to Kevin Durant‘s extension with the Thunder, even though that deal was signed a year before the lockout began. Rookie-scale extensions don’t take effect until a year after they’re signed, so Durant’s deal kicked in for 2011/12, the season following the lockout. Naturally, the league’s decision didn’t sit well with the Thunder, and in July 2013, the NBA voted to reimburse the Thunder for a portion of the difference between what Durant’s extension would have been worth without the Rose rule and the $89MM+ he wound up with.

While the Thunder agreed to Durant’s extension without knowing that the Rose rule would take effect, teams and players are never sure of the precise terms of a maximum rookie-scale extension when they strike a deal for one. That’s because the deadline to do so is October 31st of the year before the extension would take effect. The maximum starting salary in the extension is based on numbers that are determined the summer after it’s signed, so it’s common practice for the contracts to simply state that the player will receive the maximum, rather than specify an amount.

Rose represents a rare case of a player who had already met the requirements for a 30% max by the time he signed his extension. Others, like Blake Griffin, don’t do so until their fourth season, so teams and players can leave contract language open to allow for either the 25% or 30% max, depending on whether the player meets the Rose rule requirements in his final season under the original terms of his rookie deal. The Wizards have done so with John Wall‘s extension this summer, and last year the Rockets left the door open for James Harden to qualify for the 30% max, though he failed to do so. The Thunder went the other direction, specifying just the 25% max in Russell Westbrook‘s extension, a move that wound up saving them millions when Westbrook made his second appearance on an All-NBA Team in his fourth season.

Players can receive higher salaries under the Rose rule only if they sign extensions for at least four years, but they don’t have to be a team’s “designated player” to qualify. Teams can only sign one player coming off a rookie-scale contract to a five-year extension, and that player becomes known as the club’s designated player.

So, if the Wizards want to sign Bradley Beal to an extension in 2015, and Wall remains on the roster, they can’t give Beal a fifth year, but they can give him a starting salary worth 30% of the salary cap, even in the unlikely event Wall qualifies for the 30% max this season, too. (Wall hasn’t been voted to start the All-Star Game or selected to an All-NBA team, and since you have to do one of those twice to invoke the Rose rule, his only recourse is to win the MVP this season).

Also, the league uses a different salary cap figure to determine maximum salaries. That’s why, for instance, Griffin’s $16,441,500 salary for 2013/14 isn’t precisely 30% of the $58.679MM cap applied to team salaries this season.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement.

Larry Coon’s Salary Cap FAQ was used in the creation of this post.