A compensatory selection is a pick awarded to a team by the NFL and it can now be traded, as of 2017. The picks are awarded based on a formula that factors in the salary, playing time and awards/honours of a free agent(s) that a team lost in the previous offseason.
The NFL also factors in the players that a team signs in the previous offseason. For example, if they lose a superstar player to free agency, but sign two very good players who make the Pro Bowl, they will most likely not be rewarded a selection. The difference is the important factor involved.
In Laymen's terms, if your team loses a lot of good players in free agency and you don't sign anyone to "replace" those players, you'll be entitled to extra picks in the draft.
Last offseason, the Colts made several significant signings including:
- John Simon
- Jabaal Sheard
- Al Woods
- Johnathan Hankins
- Barkevious Mingo
- Margus Hunt
- Jon Bostic
In contrast, they lost the following key players to free agency:
- Mike Adams
- Erik Walden
- Zach Kerr
- Jonotthan Harrison
Based on the difference between the players that the Colts gained (through free agency) and the players they lost (through free agency), it should come as no surprise that the Colts received no compensatory picks.