"2. Internal employees - Stack Overflow said this has been available internally for a bit, but when employees find out what others are making they are inclined to compare their own efforts/abilities vs others. It can lead to people either asking for raises to match their co-workers, or perhaps feeling slighted and seeking other employers."

One nice thing about being transparent and consistent with salaries is that you can have an objective conversation with someone about the reasons that they're making less, versus having to rely on vague, irrelevant, or harmful explanations like "he was making more at another company," or "he negotiated harder." If someone thinks they should be making what another developer is being paid, they need to make the case based on clearly laid out criteria.

There's no compensation system that makes everyone happy, and there shouldn't be. You want a system that leaves people knowing where they stand, what it takes for them to make more, and management that encourages them to grow into that amount.