Using Widom's potential distribution theory (J. Chem. Phys. 39 (1963) 2808; J. Phys. Chem. 86 (1982) 869), a general and a special theorems are derived, by means of which one can judge whether a particular sub-process of an overall process will produce compensating changes in enthalpy and entropy. The enthalpy-entropy compensation phenomena that are observed in the transfer process of a hydrophobic molecule from a non-aqueous phase to water are examined in the light of these theorems. It is concluded that most sub-processes involved in the hydrophobic transfer process are compensating except one, that of inserting a cavity corresponding to the solute molecule in the liquid. The reason that this process is non-compensating, and therefore most responsible for the hydrophobicity, is traced to the hard core overlap between solvent and the solute molecules.