A calligram is an arrangement of words or letters that creates a visual image, and a compact calligram fits one word into a 2D shape. We introduce a fully automatic method for the generation of legible compact calligrams which provides a balance between conveying the input shape, legibility, and aesthetics. Our method has three key elements: a path generation step which computes a global layout path suitable for embedding the input word; an alignment step to place the letters so as to achieve feature alignment between letter and shape protrusions while maintaining word legibility; and a final deformation step which deforms the letters to fit the shape while balancing fit against letter legibility. As letter legibility is critical to the quality of compact calligrams, we conduct a large-scale crowd-sourced study on the impact of different letter deformations on legibility and use the results to train a letter legibility measure which guides the letter deformation. We show automatically generated calligrams on an extensive set of word-image combinations. The legibility and overall quality of the calligrams are evaluated and compared, via user studies, to those produced by human creators, including a professional artist, and existing works.