There is a halfway between 1 and 3 where the manager is told to drop 5% and rather than picking one dev per team the manager just squashes one “nice-to-have” application and drops that team.
There's also the shifting over-correction from "stack ranking is problematic and risks lawsuits about bias in performance counting" (because no one trusts performance metrics anymore) and 1 becomes "layoff a 'random' 5%" because "random" is the new "fair".
Or 5% and someone identifies a certain level that is costly and cuts that horizontally across the org to backfill with cheaper lower level employees.