Answer:
Compensation is a form of replacement
Step-by-step explanation:
Their respective definitions are:
Compensate - give (someone) something, typically money, in recognition of loss, suffering, or injury incurred; recompense
Replace - take the place of
While "replae" is a far more general definition, this example shows their relation:
I hit someone's car in a parking lot. In order to keep them from taking it to the police, I compensate for the damage with $200.
Instead of further consequences, I offered money to replace the damage I caused.