I'm more familiar with how BigCorp engineering works than startups, but I haven't heard of a place that doesn't use pay in performance reviews in some way or another, maybe unofficially, the idea being that what constitutes "good performance" for someone making $200k has to be a higher bar than for someone making $100k, or else why would you not just hire more of the $100k people? They have to be doing more or better work to justify their higher cost, which should then get factored into the review. Not necessarily closing 30% more bugs or whatever; it could just be that they're the go-to person for the hardest problems, or a repository of institutional knowledge (for long-term employees), but it has to be something. I would guess $5k doesn't register on that scale to get you kicked into a higher bar for reviews, though; $115k and $120k look like roughly the same kind of compensation tier.
Current pay is used in salary reviews everywhere. But that's obviously a terrible, terrible reason not to negotiate today. How can you possibly be worse off in a salary raise negotiation than by having the money you deserved at entry held by the employer as a concession at your employment review?
The go-to person for the hardest problems (who you generally want to be) is usually not chosen by the person who controls you comp, but in either case it's reflective of your title, not your salary, right?
