The Collaborative International Dictionary of English v.0.48:

Compensate \Com"pen*sate\, v. i.
   To make amends; to supply an equivalent; -- followed by for;
   as, nothing can compensate for the loss of reputation.
   [1913 Webster]

The Collaborative International Dictionary of English v.0.48:

Compensate \Com"pen*sate\ (? or ?; 277), v. t. [imp. & p. p.
   Compensated; p. pr. & vb. n. Compensating.] [L.
   compensatus, p. p. of compensare, prop., to weigh several
   things with one another, to balance with one another, verb
   intens. fr. compendere. See Compendium.]
   1. To make equal return to; to remunerate; to recompense; to
      give an equivalent to; to requite suitably; as, to
      compensate a laborer for his work, or a merchant for his
      losses.
      [1913 Webster]

   2. To be equivalent in value or effect to; to counterbalance;
      to make up for; to make amends for.
      [1913 Webster]

            The length of the night and the dews thereof do
            compensate the heat of the day.       --Bacon.
      [1913 Webster]

            The pleasures of life do not compensate the
            miseries.                             --Prior.

   Syn: To recompense; remunerate; indemnify; reward; requite;
        counterbalance.
        [1913 Webster]

WordNet (r) 3.0 (2006):

compensate
    v 1: adjust for; "engineers will work to correct the effects or
         air resistance" [syn: compensate, counterbalance,
         correct, make up, even out, even off, even up]
    2: make amends for; pay compensation for; "One can never fully
       repair the suffering and losses of the Jews in the Third
       Reich"; "She was compensated for the loss of her arm in the
       accident" [syn: compensate, recompense, repair,
       indemnify]
    3: make up for shortcomings or a feeling of inferiority by
       exaggerating good qualities; "he is compensating for being a
       bad father" [syn: cover, compensate, overcompensate]
    4: make reparations or amends for; "right a wrongs done to the
       victims of the Holocaust" [syn: right, compensate,
       redress, correct] [ant: wrong]
    5: do or give something to somebody in return; "Does she pay you
       for the work you are doing?" [syn: pay, pay off, make
       up, compensate]
    6: make payment to; compensate; "My efforts were not
       remunerated" [syn: compensate, recompense, remunerate]

Moby Thesaurus II by Grady Ward, 1.0:

123 Moby Thesaurus words for "compensate":
   abrogate, accommodate, adjust, alternate, amend, annul, atone,
   atone for, balance, bandy, be quits with, better, cancel, change,
   commute, cooperate, coordinate, correct, counteract,
   counterbalance, counterchange, counterpoise, countervail, cover,
   do penance, emend, equalize, equate, even, even up, exchange,
   expiate, fee, fill up, fit, fix up, get back at, get even with,
   get satisfaction, give and take, give satisfaction, guerdon,
   improve, indemnify, integrate, interchange, invalidate, level,
   live down, logroll, make all square, make amends,
   make compensation, make good, make matters up, make reparation,
   make requital, make restitution, make retribution, make right,
   make up, make up for, negate, negative, neutralize, nullify,
   offset, outweigh, pay, pay back, pay by installments, pay damages,
   pay off, pay on, pay reparations, pay the forfeit, pay the penalty,
   permute, poise, prepay, propitiate, proportion, put right,
   put straight, put to rights, quit, reciprocate, recompense, recoup,
   rectify, redeem, redress, refund, reimburse, remedy, remit,
   remunerate, render, repair, repay, requite, respond, retaliate,
   return, return the compliment, reward, right, salary, satisfy,
   set off, set right, set straight, set to rights, set up, square,
   square it, square things, strike a balance, swap, switch, tender,
   trade, transpose