the meaning of "compensation" in the context

Solution 1:

This usage of the word compensation is interesting. The first definition, as cited in the Cambridge English Dictionary online is as follows:-

Money that is paid to someone for something that has been lost or damaged, or for some problem.

This seems to be the original meaning. But more recently we hear of this different usage, related to payments to above all very highly paid employees. This CED defines as:-

the combination of pay and other benefits (=rewards) that an employee receives for doing their job.

Example: “Annual compensation for our executives includes salary and bonus under our incentive scheme.

Merriam Webster gives a similar definition.

How does the idea that someone has to be compensated for doing their job come about? Well, both dictionaries start their examples with a particular type of job: that of executives. We do not hear of miners or trawler men, police officers or soldiers receiving compensation, except when they are actually injured, a circumstance far more likely than for executives. The word is certainly associated with the payment of money, but in relation to ‘making up for’ an injury suffer in fact or law.

Could it be a kind of euphemism as the difference between the highest paid and the rest has grown? I suspect it is something like that. The word has this idea behind it that the person has given up or lost something into order to justify this (very large) compensation.

Solution 2:

It doesn't refer specifically to the bonuses. It refers to all that they receive in payment for doing their jobs, including the bonuses.