<p>When financial incentives become too psychologically prominent in employees’ minds, they transform from motivational tools into sources of pressure that undermine the very performance they aim to enhance. This study advances both self-determination theory and compensation literature by introducing incentive salience – the cognitive prominence of compensation – as a key determinant of whether rewards are experienced as controlling. Drawing on self-determination theory, which distinguishes between rewards perceived as informational (supporting competence) versus controlling (pressuring compliance), this two-wave field study (<i>N</i> = 335) investigates how total annual income and income salience differentially affect employee outcomes through psychological need frustration. We also examine whether managerial autonomy support moderates these relationships. Results reveal opposing effects: higher income is associated with lower frustration of competence and relatedness needs, indirectly enhancing task performance and subjective well-being. Conversely, greater income salience directly increases frustration of all three basic needs (autonomy, competence, relatedness), leading to detrimental outcomes including reduced in-role and extra-role behavior, lower innovative behavior, increased unethical behavior, and diminished subjective well-being. While autonomy support strongly reduces need frustration as predicted, it operates independently rather than interactively with compensation effects. For compensation researchers, these findings reveal psychological need frustration as the mechanism explaining when prominent rewards backfire. For SDT scholars, we operationalize salience as a measurable antecedent of rewards’ controlling function. For practitioners, results demonstrate that making compensation too cognitively prominent transforms it from supporting performance to frustrating basic human needs, ultimately harming both productivity and employee well-being.</p>