LQG compensator gains (i.e. the gains of a controller and of an estimator) are obtained from solutions of Riccati equations. For the balanced compensator the solutions are equal and diagonal. An approximately balanced LQG compensator for flexible structures is analyzed in this paper. The performance of an LQG compensator depends on the weights of the quadratic performance index and on the variance of the estimator noise. The relationships between weights/variances and characteristic values of the system as well as between weights/variances and the system pole location are derived. Thus the weights can be determined to meet the requirements of a closed-loop system. For the balanced reduced-order compensator the stability margin and performance are similar to the fun-order compensator.