I work as an R&D Technician for an international company in the U.S. supporting new metal technologies for the aviation, nuclear, and a broad range of other industries.
Recently had my year end review.
My performance and understanding of my position was excellent with high accolades. One section of the review addresses behavior.
How do I respond with required feedback when there is exaggerated fabricated information with no objective evidence to back what has been stated?

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Be really professional if you do address this. Ask for examples so you can understand the context of the feedback. I do feel sometimes opinions tend to lead the behavioral side, and they usually do not have facts or documentation to back them up.

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Thank you for your feedback it is absolutely appreciated. I will provide an update to the response I come up with.

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You can say that in a professional way. I would word it something like, "this is not how I perceived XYZ." I would definitely make sure you stand up for yourself though.

I agree ask for examples but in the context that you want to improve

If it is grossly fabricated and could hurt you later, raise it to HR and raise it up the chain. 2nd level manager and so on. Especially if you have proof, often it will get review and take care of if you are persistent.

Receiving strong feedback but limited compensation can feel confusing. Sometimes organisations separate performance recognition from budget constraints, though that rarely makes the outcome feel fair.

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