What is Compensation?

Answer:
Compensation is usually used as a synonym for salary, wage or payment.

For example, a common phrase amongst corporate leaders is the discussion regarding “executive compensation” for a new VP. In this sense, an employee can be compensated for his or her work not only in plain dollar amounts but also with special benefits, stock options or other forms of payment that form a payment package.

On a more basic level, compensation is that which is given in exchange for something else, usually a service. Compensation can also be the restitution made to someone in the event of a loss, accident or wrongdoing. For example, an insurance company can offer monetary compensation to the victim of a car accident.