Compensation

When one player plays a negotiate and his opponent plays an attack card, the player who played the negotiate card gets to collect compensation. That player must randomly take one card for each ship he or she lost to the warp (not counting any allies’ ships – they go to the warp without compensation) from his or her opponent’s hand. If the player’s opponent doesn’t have enough cards to provide full compensation, the player takes the opponent’s entire hand of cards.
 * When selecting cards at random from a hand with both cosmic and reward cards, a player is allowed to choose which card backs he or she is targeting. In other words, “at random” means “without seeing the faces of the cards.”

If the offense runs out of encounter cards after paying compensation, the offense’s turn ends immediately.

Paying Compensation
Compensation does not create any kind of “lien” or “hold” or “freeze” on your hand. You are free to use any cards that may be legally played before compensation begins to be collected.

So, you could play a reinforcement card to get it out of your hand before compensation is taken, for instance.

However, once the opportunity to play such cards has passed and compensation begins, then it is too late. For example, you cannot wait to see if Hacker is going to target you before deciding whether to “dump” your reinforcement cards, because the time to affect encounter totals has already passed. Once an effect targets your hand, nothing can interrupt that effect except a Zap or some other power or effect that specifically lets you interrupt it.

"Lost ships" vs. "Losing ships" vs. "Sent ships"
Compensation only comes for ships lost to the warp. For example, Zombie would not be entitled to compensation as their ships do not get lost to the warp; or ships losing to Void would not be entitled to compensation as ships are not lost to the warp.

Lost ships are any that go to the warp involuntarily at any point in the encounter.

Losing ships are those involved in the encounter (main player or allies) that should go to the warp.

Sent ships are those that go to the warp because of a specific player action (power or effect), sometimes voluntarily, but not directly involved in the encounter, and count as lost. Remote “sends” ships to the warp, and those ships are “lost” to the warp (but are not “losing” ships). Zombie’s ships would be “losing” ships, but are not “lost” to the warp. Fungus captures losing ships, so would not capture ships lost to Grudge. Observer would protect losing ships, and those lost or sent.

Note that Void specifically eradicates losing ships rather than sending them to the warp (this is why Zombie’s ships are eradicated, and why Fungus would not capture losing ships as Void’s ally).