In a consultative document the review body will examine how an element of salary progression might be linked to the targets envisaged in the White Paper Excellence in Schools. This would help governing bodies set performance criteria and help tackle regional disparities.
In practice heads and deputies in London and the South-east are more likely to be awarded additional spine points than their colleagues elsewhere.
It admits that heads who do well are currently only rewarded by schools that can afford it.
David Blunkett, the Education Secretary, had expressed concern about the supply and quality of primary heads and asked whether present pay levels were enough to attract good candidates. But the review body said the recruitment position for primaries was not much different than that for secondaries.
It notes that governors are often not confident about dealing with heads and deputies' pay, and the Office for Standards in Education doubted the ability of governors to set performance targets and decide salary rises.
The review body said it approved of local education authorities which set up independent governors' forums and said extra training on dealing with pay should be offered.
The report supports the view of headteacher unions that issues such as non-contact time are management concerns and, while it accepts excessive workloads can be a problem, it says nationally prescribed limits are not the correct approach.
Mr Blunkett had asked Tony Vineall, chairman of the review body, to strengthen the head's role on dealing with poorly-performing teachers. Mr Blunkett had suggested making it a head's duty to consider the performance of all staff and to report to the governors.
The review body said: "The head should keep the governing body informed but without disclosing details of individual cases; and he should report to the chair of governors on the professional development of all staff."
It was concerned that information given about individuals could be used against them in incompetence or dismissal procedures. It recommended a statutory duty on headsto report annually to the chair of governors on the professional development of all staff and to ensure effective measures to deal with incompetent teachers. As a result, chairs of governors should not be participants in dismissal procedures as such information may be prejudicial.
Salaries Policies, page 29