The Collaborative International Dictionary of English v.0.48:

Compensation \Com`pen*sa"tion\, n. [L. compensatio a weighing, a
   balancing of accounts.]
   1. The act or principle of compensating. --Emerson.
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   2. That which constitutes, or is regarded as, an equivalent;
      that which makes good the lack or variation of something
      else; that which compensates for loss or privation;
      amends; remuneration; recompense.
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            The parliament which dissolved the monastic
            foundations . . . vouchsafed not a word toward
            securing the slightest compensation to the
            dispossessed owners.                  --Hallam.
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            No pecuniary compensation can possibly reward them.
                                                  --Burke.
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   3. (Law)
      (a) The extinction of debts of which two persons are
          reciprocally debtors by the credits of which they are
          reciprocally creditors; the payment of a debt by a
          credit of equal amount; a set-off. --Bouvier.
          --Wharton.
      (b) A recompense or reward for some loss or service.
      (c) An equivalent stipulated for in contracts for the sale
          of real estate, in which it is customary to provide
          that errors in description, etc., shall not avoid, but
          shall be the subject of compensation.
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   Compensation balance, or Compensated balance, a kind of
      balance wheel for a timepiece. The rim is usually made of
      two different metals having different expansibility under
      changes of temperature, so arranged as to counteract each
      other and preserve uniformity of movement.

   Compensation pendulum. See Pendulum.

   Syn: Recompense; reward; indemnification; consideration;
        requital; satisfaction; set-off.
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