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]