In principle, I wish I could freely share my salary with others. But in practice, I keep it a close secret. Why? Because I have to work with people very closely.

This is not intended as a humblebrag.

So for the year 2014 my performance review was excellent. Pretty much firewalled. I've taken on a lot of technical responsibility above my pay level (because I want to raise my pay level!). I was rewarded with a substantial raise. But several of my coworkers were very upset with their raises (which were very minimal) and vented openly about them. Should they find out that I received a raise higher than them, how would they react? Given their open whining, probably not well. Their anger would be directed toward me. I'd rather avoid that silliness.

You raise a good point - which I why I think the exact specifics of salaries can be a little blurry.

I.e. "Your peers make between $x and $y. They received performances bonuses of between $z and $q this year", etc. etc.

But it's still important to have the open discussion and get it out in the open.

That sort of information gets out anyway. We all know what the salary range is for the various engineering levels. Example, I'm a level 3 engineer, so the salary band is (off the top of my head) somewhere from 85k to 103k/year. The raises given this year ranged from 1% to 6%. So we all know roughly how people are doing, but only our manager knows exactly who got what % raise.

And an additional problem, especially at larger & lower margin companies, is that managers have an extremely limited bonus pool and probably also don't have permission to issue annual merit increases. This results in shuffling bonus money around in ways that make no logical sense. For example, I'd need a couple additional hands worth of fingers to count the times I've passed over someone for a bonus because they had received a promotion or a significant salary increase in the past few months. Is that fair? Absolutely not. But the alternative was that another solid employee would get neither a salary bump or a bonus, which was worse.

Ultimately, I found the best policy while working under these conditions was to be blunt & open with all my staff over how I planned to handle salary increases, promotions & bonuses, so at least I could assuage their fears that it was n't consistent in addition to not being fair.

Big corporations usually suck at talent management and compensation.

All corporations usually suck at talent management and compensation because we are terrible at measuring true value. We pick metrics which we think are a proxy, but often aren't or are easily gamed, or manager bias overrules it all

Agreed. I've had other coworkers direct their anger at me when finding out I made more. And I've felt the glower of jealousy & feeling cheated when finding out someone else made more, even if I was being paid fairly.

In both cases, merit didn't even factor in to the equation. It doesn't seem to be a rational response.

They need to be rational and look at what the issues were (if any) and try to solve them. This has to be looked at from a social perspective too, a more social and leading person will get a raise as it's perceived as knowledge.