• A Type A free agent was ranked in the top 20 percent of players at his position. A team that signed a Type A player gave its top draft pick to the club that the player left; that club also received a supplemental pick in the "sandwich" round between the first and second rounds.
• A Type B free agent was ranked below the top 20 percent but in the top 40 percent of players at his position. A team that lost a Type B player received a supplemental pick, but the signing team did not lose a pick.
To earn a compensatory pick, a free agent must have been either signed before the arbitration deadline in early December, or offered arbitration by their former team but still signed with another team.
Compensatory picks that one team gave another via this method were the highest available pick that team had, with the exception of picks in the top half of the first round. These picks were protected from being used as compensation. If a team that picked in the top half of the first draft signed a Type A free agent, they would give up their second-round pick. If a team owed two other teams draft picks via Type A free agents, the team whose departing player had a higher score got the higher-ranked pick. A team could not lose picks it earned via compensation. The post-2012 rules for this aspect of the draft are similar, except that the "Type A" and "Type B" designations no longer exist.