Two related questions are raised in this regard: how are teachers to have their performance appraised, and who should do it?
In an early draft of a performance pay formula for our school, I included a value-added model in our proposal, and the value added to students' actual vs. predicted performances on external assessments was slated to be worth 20% of a teacher's appraisal, which would have determined that teacher's bonus; but I now think that 20% was too high. The model I currently support, after having engaged in international correspondence with some of the world's best qualified experts on these matters, utilizes five criteria to define professional performance: "knowledge and understanding of curricula; planning, teaching, and class management; assessment, recording, reporting, and accountability for student achievement; pastoral and co-curricular support for and involvement with students; and other professional responsibilities, including approach towards professional development as well as interaction and cooperation skills." "Accountability for student achievement" does refer to that teacher's students' scores on external exams; but that is only one of four items listed in that assessment criterion, which, if the criteria were equally weighted, would combined make up 20% of the total (but I no longer support any such addition, because it is an instancing of the fallacy of composition, which assumes that a whole is equal to the sum of its parts, which is invalid).
In short, I do not believe that any mathematical formula can perfectly appraise a teacher's performance; and even if I did believe in such a formula, to base at least half of x's appraisal on the performance of y, not x, is unjust; and because a group of vengeful students could potentially sabotage a teacher's career by intentionally spoiling their exams, which carry no consequences for them (this is the worst of the many flaws in America's test-based accountability system; and the intentional spoiling of tests was a reality at Locke High School when I first started there ten years ago), such proposals, which have recently been enacted into law in several states, make for very unsound public policy.
And this brings us to the second question raised above, that of who should be carrying out teacher appraisals. For in fact I have above quoted from contract language for our school--and while I believe it to be consistent with our vision and aims, I do not pretend to claim that it is (or isn't) appropriate for other schools, especially for very different ones, such as primary schools. My point is that no teacher appraisal formula is likely to work well for every school in any state; and if our educational leaders really want to serve (not lead, or rule, which can run counter to the principles of democratic education, and does so in this instance) their schools and their students well, they would do best to take their hands off any such decisions, and instead devolve that power further down to a level closer or equal to that of the individual school, and should forgo trying to save humanity by dictating teacher evaluation formulas from their inner sanctums in the hopes of finally finding the magical secrets needed to save all those profane souls not similarly blessed but instead consigned to schools under their power.