This is not a problem inherent in stack ranking. Any performance review system that (1) allow unbalanced pay and (2) makes this fact visible to employee, will cause exact same issues. Here unbalanced pay means you want to divide available reward such that higher performing employee gets lions share while those at the tail gets peanuts. Whether you do this through peer reviews or through manager reviews or stack ranking or team level performance or by throwing dice, you will always find some portion of employees feel the system is unjust and they deserve better ratings. Only way to avoid this is by equal bonus pays OR not assigning any ratings at all. For most technology companies at least the option of paying every one equal bonus won't be acceptable. It is known fact that highest performing employees perform 5X-20X than lowest performing employees and it would be hard to retain them if they were paid same bonuses as everyone else.
However not disclosing ratings could certainly be option. Or you can only disclose binary ratings "Stay/Fire" or trinary rating "Green/Yellow/Red" where they don't disclose amount/range of bonus but whether employee performance was sufficient for continuity of employment. People who thought that disclosing bonus indicating ratings was a good idea probably bought on an argument that this will motivate employees to improve themselves to get higher ratings. In reality many aggressive employees actually do work even harder to get back to better ratings however people who have feel lack of opportunity or are rusted eventually settle down with being labeled "average" and pull back on their effort level just to keep employment going.
The problem is that if you have an A team where all the members are performing well and deserve good compensation compared to the rest of the company, stack ranking forces you to penalise some of them anyway, even if its for minor petty reasons that in other teams would not be a factor.
Nobody is arguing that good people shouldn't be rewarded compared to poor performers. The problem is that stack ranking actively works against the formation of stable teams of high performers anywhere in your company.
You are assuming that monetary compensation is the only motivator for employees. And that's simply not true. Once people have enough that they can feed their family and put their kids through college, money isn't as important a motivator. So while you do want to reward your superstars, it follows that (a) the fact that lower performing employees get paid less may not be so much of a problem, so long as they are adequately paid (i.e., not "peanuts"), and (b) money may not necessarily be the best way to do this --- you need to make sure that their good work is recognized, and you need to take into account what they want to work on.
At the end of the day, it's going to be the other things; a fun/pleasant workplace, development tools that don't suck, a collegial environment, which are going to be more important for most employees once their basic needs are met.
Perhaps in a startup environment, where hours are long and the pressure to ship trumps everything else, people forget about these things and think only about the compensation which will hopefully be coming over the horizen in case the startup makes a successful exit. But in a more mature company, I'll suggest that an attitude like that is extremely short-sighted.
However not disclosing ratings could certainly be option. Or you can only disclose binary ratings "Stay/Fire" or trinary rating "Green/Yellow/Red" where they don't disclose amount/range of bonus but whether employee performance was sufficient for continuity of employment. People who thought that disclosing bonus indicating ratings was a good idea probably bought on an argument that this will motivate employees to improve themselves to get higher ratings. In reality many aggressive employees actually do work even harder to get back to better ratings however people who have feel lack of opportunity or are rusted eventually settle down with being labeled "average" and pull back on their effort level just to keep employment going.