How much simpler would it be to just pay people fairly and eliminate the jealousy around inconsequential pay differentials. One reason people put so much weight onto such small differences is that they are looking for signs of recognition and appreciation. Give them the recognition and appreciation all of the time, throughout the year, and you will find that the need for a symbolic but inconsequential raise will shrink.
Make the Outcome Be Correct
Most managers in most review and compensation systems have wide latitude when making final determinations concerning raises. A manager of an agile team should know more about everybody and more about the factors of team success than an equivalent manager in a command-and-control environment. Use the knowledge to make the right thing happen.
Emphasize the Non-monetary Satisfactions of Agile
If you have a reasonably healthy agile implementation, your people will generally feel more positive about their jobs than they did in the pre-agile past. Find out if this is true and add it to the annual review picture. People enjoy having professional latitude. They enjoy having some control over their work life. They enjoy being able to contribute in unexpected and creative ways. They enjoy not being micro-managed. These and other benefits of agility count greatly towards overall employee job satisfaction and engagement. Arrange to have these positive aspects of agile be noticed, discussed, and mentioned during your annual performance review. Allow the performance review to include the employees' review of management and the company. You'll be surprised at some of the good ideas you will get from this kind of discussion.
Deal with the Outliers
All but the very most incompetent managers know which of their employees are the top performers and which are the bottom feeders. Neither Scrum nor waterfall nor lean nor agile makes this any more or less obvious. You can take action on your top 1 percent and bottom 1 percent (or even 5 percent) regardless of the methodology your teams use. Make sure your one or two true stars are kept happy, and don't be afraid to deal with your one or two laggards.