With the continuous evolution of structural design philosophies, Working Stress Design has been replaced and Ultimate Strength Design is now giving way to Performance-Based Design (PBD). However, ambiguities remain regarding the most reliable performance indicator. While FEMA-350 emphasizes inter-story drift, ASCE41-17 highlights hinge deformation. This study reveals that the relative importance of plastic hinge deformation and story drift in the PBD of steel moment frames is influenced by building height. By comparing optimal designs for 6- and 12-story frames, it assesses how the design criteria—story drift, plastic hinge rotation, or both— affect the building’s seismic fragility. A newly robust optimization method called RUPSO has been applied for optimal design. Fragility curves are developed using two nonlinear modeling approaches: distributed plasticity (by fiber elements) and concentrated plasticity (plastic hinge properties per Modified Ibara-Krawinkler). Each structure was modeled with both approaches. Results showed notable differences, with concentrated plasticity yielding more consistent fragility curves. Finally, it has been demonstrated that designs governed by inter-story drift are safer than those restricted by hinge rotations; however, the most reliable performance is achieved when both criteria are satisfied simultaneously. Incorporating both drift and hinge deformation required 9% and 5.5% more material for the 6- and 12-story frames, respectively, but reduced collapse probabilities by 60% and 30%. These findings underscore the importance of integrating multiple performance measures in PBD to achieve safer and more resilient structures.