Apologies for the wall of text, I started describing my company's review and bonus process... and realized how foreign it might sound from an outside perspective.

In principle our review process is similar to yours. In practice... it's bat shit convoluted. We effectively have a profit sharing scheme. People are awarded bonus "units" annually. One third of company profits feed into a bonus pool, there's slightly more nuance here but not worth going into. These bonus units are entirely separate from company equity... which is a thing they also offer to senior people, but that's outside my purview.

We have employee levels which represent seniority. Each level has a bonus unit target (i.e. level 1 = 10, level 2 = 25, level 3 = 50, etc). We compare all people in each level and rank them. We have to challenge and defend these rankings. People will often get ticked up or down. The end result is that bonus awards will be on a distribution around each level's target (i.e. a level 3 person can technically get anything between 25 to 75 units though at the extremes they'll likely just get promoted or demoted). There are several layers of these review meetings to normalize ratings across groups and layers of management.

Complicated enough yet? There's more! The average value of these bonus units has been increasing over time so there's active pressure from upper management to decrease the number units being award. Big picture it make sense that they don't want to pay a multiplier of market rate, but it's a shit message to deliver to people. The other nuance is that these bonuses are large, especially at higher levels. For my senior report, for instance, his bonus will be more than half his total compensation.