A compound modifier (also called a compound adjective) is an adjectival or adverbial phrase of two or more words. According to modern writing guides, compound modifiers require a hyphen between each word (not between the phrase and the noun the phrase modifies). Hyphens help prevent confusion; otherwise, a reader might interpret the words separately, rather than as a phrase. One or more hyphens join the words into a single idea.

Examples

• Long-term contract (not long term contract -- a long contract about a term)
• Hard-fought battle
• Better-educated individuals

Exceptions:

• Do not use a hyphen following adverbs that end in "ly" (quickly forgotten incident).
• Do not use a hyphen following "very" (very elaborate presentation).
• Most phrases that need hyphens as compound modifiers should not by hyphenated if they come after the noun they describe: a contract for a long term.

References

The Associated Press Stylebook and Libel Manual, Addison-Wesley Publishing Company, Inc. (1992)

English language