Network coding (NC) has frequently been promoted as an approach for improving throughput in wireless networks. Existing work has mostly focused on the fundamental aspects of NC, while constraints arising in real-world network deployments have not received much attention. In particular, NC requires network nodes to overhear each other's packets, which oftentimes contradicts many security standards that attempt to provide link-layer confidentiality, e.g., by utilizing pairwise encryption keys as is the case IEEE 802.11i and ZigBee. There is an inherent trade-off between gains from NC and link-layer security: if many nodes share the secret link-layer key, NC will improve throughput, yet a leakage of the key will affect many nodes. On the other hand, having distinct secret keys will increase resilience against key compromise, but will also minimize the coding gain. We formulate this security vs. performance trade-off as an optimization problem and evaluate the effectiveness of NC under different sizes of key-sharing groups and network topologies. Our results show that increasing the key-sharing group by a single node can result in a maximum coding gain between 1.3% and 13.7%.