Compensation refers, in general, to the exchange of something for services rendered. Traditionally, compensation will come in the form of money, although it can come in the form of something else of monetary value (such as in the case where a project manager may receive stock options or other forms of investment benefits in lieu of cash). Compensation can be in the form of salary paid to the project team for the time they spend working on the specific project (in some cases, work on a given project may be part of a project team member’s regularly paid salary, and in others, it may be cause for a special salary or bonus of sorts). Compensation also can refer to the receipt of remuneration for monies spent by project team members in their roles in completing tasks for the project. For example, if travel expenses were incurred, and the project team members outlay the cash for those expenses upfront, they will typically receive compensation from their employer (or the assigning party if different) at some point either during or after completion of the project.
This term is defined in the 3rd edition of the PMBOK but not in the 4th.