Merit doesn't always count. Look at it this way, a manager is likely to promote a guy who for example... takes him out for lunch, looks after his interests at work and else where. Managers trust 'yes men'. So if you work hard but don't quite really act like their closest associates in the gang, you are done. Nerds with high self worth, who can actually be something by themselves by their work and sweat alone can't do all this. They always lose out like edw519 even if they have done 3x the work.
Lose out might be the wrong word. Because though you lose out on the shorter run. On the longer run, the 'yes men' lose capability to do something on their own (Read:Retire on their middle management job). The hard working nerd, if he really sticks to his guns and doesn't give up will make it big someday.