You can get a great performance review and you will still get the same merit increase as anybody else. Merits also never cover inflation and cost of living. If you are close to the higher pay range for your job you won't get anymore raises. This turns into little to no incentive to outperform your peers. Field promotions are also like a steep pyramid. Once you get to a certain level it's almost impossible to get a promotion simply because there is nothing else. New hires are paid much more than mangers hired just a few years ago. This leads to senior managers being very close to the same salary as the people they manage. No one I have ever heard of has received a raise just based of good performance.
