It's not a reward for past performance. They're putting who they think will do best in the role in the role and past performance is one very large, but not the only axis on which that is judged.

And, that being said, in larger and richer organizations (infinite monopoly bucks fueled FAANG workplaces perhaps being the penultimate example) the incentives to simply promote the most fit can get more easily polluted by irrelevant criteria than in smaller, leaner organizations that have less runway to continue existing and less opportunity for individuals to dip out without consequence if decisions are not made in a rigorous manner and the results are bad.