If a player selected in the 1st or 2nd round of the Rule 4 Draft does not sign, the club receives an extra compensation selection in the next Rule 4 Draft, one slot lower in the 1st or 2nd round than where the club selected the previous season. If a player selected in the 3rd round of the draft does not sign, the club receives an extra compensation selection between the 3rd & 4th rounds in the next Rule 4 Draft. A club would receive another compensation pick in the next Rule 4 Draft after that if a player selected with an extra compensation pick does not sign, but there is no additional compensation pick awarded the following season (three years removed from the original draft pick) if a club is unable to sign that player.
Compensation draft picks awarded to clubs for losing an Article XX-B MLB Free-Agent will be slotted between the 1st and 2nd rounds of the next MLB Rule 4 Draft, with clubs selecting in inverse order of league standings from the previous season. (In the case of two clubs finishing with the same winning percentage the previous season, league standings from two seasons back will be used to break the tie. If the clubs are still tied, league standings from three seasons back, four seasons back, etc, will be used to break the tie). A draft pick awarded to a club for losing an Article XX-B Free-Agent can be used only in the next Rule 4 Draft. There is no further compensation if a player selected with the compensation pick received as the result of losing an Article XX-B Free-Agent does not sign.