I agree with you on the issue with new hires getting paid more. It's market forces at work, but... yeah that shit sucks.

Regarding your first point I think you're a bit optimistic as to how well people take such a conversations. For example, doing well _at level_ (in my experience) means meeting expectations. There's no way someone meeting expectations should get 90th percentile comp for their level. So are you mature enough to accept that you're not good enough to warrant p90 comp?