The commercial nuclear power plant industry initiated the licensing modernization project (LMP) to enhance the risk-informed and performance-based (RIPB) regulatory basis for advanced nuclear power reactors. The LMP framework relies heavily on RIPB concepts and approaches that together integrate the defense-in-depth philosophy. One example approach for seismic design is to align the LMP concepts with the performance targets described in the American Society of Civil Engineers (ASCE) standard, ASCE 43-19. The underlying strategy of this approach is to consider the performance of individual structures, systems, and components (SSCs) in seismic design, as well as the role they play in an accident event sequence. This approach contrasts with current regulations, in which every individual safety-related SSC is designed to the same seismic criteria irrespective of the role the SSC plays in the overall system performance. This new philosophy envisions more flexible seismic design options for each SSC, such that the overall seismic design can meet system-level acceptability criteria as well as plant-level acceptability criteria. The objective of this paper is to illustrate the flexibility and benefits of this proposed approach to the seismic design of SSCs in terms of reduced SSC demands (by reducing the design ground motions for SSCs) and improved SSC capacities (by allowing for alternative damage state limits). A simple shear wall was designed using ASCE 43-19 for a hard rock site in the Central Eastern United States considering alternate seismic design category and limit state combinations to examine the physical designs and functional fragilities of these combinations and their impact on seismic performance. The flexibility of this proposed approach is illustrated by an example that shows reduced SSC demands, while the SSC capacities and margins remain consistent with the required safety performance without any loss in overall plant safety.