Every group has a budget for off cycle comp. Either one-time payments (extra bonus) or adjustments (extra raise). It's there to help with retention and to fix up obvious oversights (sometimes you get a great person in your org and find for whatever reason that they're at the bottom of the pay band).
It needs to be used appropriately, as the budgets not huge, and depending on the org, discretion to use it may be at a director level or up to senior VPs.
Your manager is looking out for you, and is trying to get you paid. The director said no, but could be for a variety of reasons. Could be the director doesn't agree, could be the budget is spent, or is earmarked for a management decision. Could be the VP said no. Could be that there's someone else in the org they need the money for.
The good news is, your manager is getting your name out there with leadership, and maybe that will be off in a better raise/bonus next year, or a promotion.
At PG26, you'll see much better long-term rewards if you can manage the jump to PG30, than what you'll get from an off-cycle raise.