From Longman Business Dictionary
compensatecom·pen·sate /ˈkɒmpənseɪtˈkɑːm-/ verb [intransitiveI, transitiveT]1to pay someone money because they have suffered injury, loss, or damagecompensate somebody for somethingHe has promised to compensate farmers for the price cuts.
2American EnglishAmEHUMAN RESOURCES to pay someone in money and other ways for work that they doNobody knows if compensating executives better makes their companies perform any better.