A compound butter is cold butter with some kind of flavoring mixed with it, such as herbs or reconstituted dried mushrooms. Maitre d'hôtel butter, made by working butter with chopped parsley and a little lemon juice, is the best-known traditional version. It is ubiquitous on steak frites in restaurants in France.
The value of compound butters is their versatility—they can be made with nearly any flavoring—and their ability to preserve the flavor of whatever ingredients are used. For example, if you have extra fresh tarragon on hand, chop it with butter and freeze it. You can then serve it atop a piece of fish or chicken, or whisk it into another sauce just before serving. When making herb butters, chop the herbs coarsely and then finish more finely by chopping them with the butter. This method is better than chopping them by themselves and then combining them with the butter, which causes them to turn dark. Chopping them with the butter keeps them from turning dark and losing flavor. Use the largest knife you have or are comfortable using so that you’re cutting more at a time and the process goes more quickly. Keep tightly wrapped in plastic wrap or parchment paper until ready to use.