The word should have been godtgjøres - for which compensated is a good choice. A better source word would have been 'betales' - the passive voice version of pay, as in be paid. Generally, compensation is an unnecessary complication of pay, and has overtones of righting a wrong. Godtgjøre means make good (what was wrong), which presumes an undue burden on the subject in the first place.
So - when the source text contains a wrong word, be it spelling or meaning (and how often doen't that happen), the translation should right that wrong.