All of you who believe the PHB incapable of long term strategic thinking will need to reconsider. It seems one of the PHB's goals is to "anticipate any attempts by underlings to justify pay raises and preemptively counter them". His planning was exemplary.
As an employee you are pretty much in a no win situation. If you meet or exceed your goals then management's perception will not be that you did a good job. It will be that you set your goals low so that you could look good. Of course, your goals were just fine when you originally set them.
Been there, done that. Your fate has already been decided even before you write out your performance plan. No matter what you do, or what you achieve, management is going to give you their predetermined rating. The deck is stacked against the employee. Your best bet is to strive for mediocrity, save as much as you can, and when management finally lays you off, walk away and enjoy the rest of your life, and be thankful for escaping the death row called a cubicle farm.