Ranking will be done for all groups under the director, by the director. Your manager and senior manager will not choose the 5%.
It will not occur at the individual group level. Example: If your team has 10 people in it and all are at or above expectations, the director may pull the 5% from other groups.
5% of each level will be cut (Level 5, 6, 7) and it will be based on a bell curve.
Bell Curve
Seriously under performance x%
Below Expectations y%
Meets Expectations z%
Above Expectations y%
Excellent Performance x%
There's a big metric I can't mention here, but it will be very obvious after the cuts. It will cause morale issues.
Irresponsible speculation: I suspect some groups will be favored over others and the 5% will be taken from groups that are lower in favor with the director. Take this one with a pinch of salt.