As filed with the Securities and Exchange Commission on August 31, 2006September 4, 2007

UNITED STATES

SECURITIES EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrantx                            Filed by a Party other than the Registrant¨

Check the appropriate box:

GLOBAL PAYMENTS INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

GLOBAL PAYMENTS INC.

10 GLENLAKE PARKWAY, NORTH TOWER

ATLANTA, GEORGIA 30328

NOTICE OF 20062007 ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders:

The 20062007 annual meeting of shareholders (the “Annual Meeting”) of Global Payments Inc. (the “Company”) will be held at the Company’sour offices at 10 Glenlake Parkway, North Tower, Atlanta, Georgia, 30328-3473 on September 27, 2006,26, 2007, at 11:00 a.m., Atlanta time, for the following purposes:

Only shareholders of record at the close of business on August 11, 200610, 2007 are entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. You may vote your shares by completing and returning the enclosed proxy card, or you may vote via the Internet or by telephone. Instructions for voting via the Internet or by telephone are set forth in the enclosed proxy statement and proxy card.

YOUR VOTE IS IMPORTANT

Submitting your proxy does not affect your right to vote in person if you attend the Annual Meeting. Instead, it benefits the Companyus by reducing the expenses of additional proxy solicitation. Therefore, you are urged to submit your proxy as soon as possible, regardless of whether or not you expect to attend the Annual Meeting. You may revoke your proxy at any time before its exercise by (i) delivering written notice of revocation to the Company’sour Corporate Secretary, Suellyn P. Tornay, at the above address, (ii) submitting to the Companyus a duly executed proxy card bearing a later date, (iii) voting via the Internet or by telephone at a later date, or (iv) appearing at the Annual Meeting and voting in person; provided, however, that no such revocation under clause (i) or (ii) shall be effective until written notice of revocation or a later dated proxy card is received by the Corporate Secretary at or before the Annual Meeting, and no such revocation under clause (iii) shall be effective unless received on or before 11:59 p.m.1:00 a.m., Atlanta time,Central Time, on September 26, 2006.2007.

When you submit your proxy, you authorize Paul R. Garcia or Suellyn P. Tornay or either one of them, each with full power of substitution, to vote your shares at the Annual Meeting in accordance with your instructions or, if no instructions are given, for the election of the Class IIII nominees. The proxies, in their discretion, are further authorized to vote on any adjournments or postponements of the Annual Meeting, for the election of one or more persons to the Board of Directors if any of the nominees becomes unable to serve or for good cause will not serve, on matters which the Board does not know a reasonable time before making the proxy solicitations will be presented at the Annual Meeting, or any other matters which may properly come before the Annual Meeting and any postponements or adjournments thereto.

Dated: August 31, 2006September 4, 2007

August 31, 2006September 4, 2007

GLOBAL PAYMENTS INC.

10 GLENLAKE PARKWAY, NORTH TOWER

ATLANTA, GEORGIA 30328

PROXY STATEMENT

Introduction

This Proxy Statement is being furnished to solicit proxies on behalf of the Board of Directors of Global Payments Inc. (the “Company” or “we”) for use at the 20062007 annual meeting of shareholders (the “Annual Meeting”), and at any adjournments or postponements thereof. The Annual Meeting will be held at the Company’sour offices at 10 Glenlake Parkway, North Tower, Atlanta, Georgia, 30328-3473 on September 27, 2006,26, 2007, at 11:00 a.m., Atlanta time, for the following purposes:

This Proxy Statement and the accompanying proxy card are first being mailed to shareholders on or about August 31, 2006.September 4, 2007.

Quorum and Voting

(1) Voting Shares.Pursuant to the Company’sour Amended and Restated Articles of Incorporation, only the Company’s common shares, no par value (the “Common Stock”), may be voted at the Annual Meeting.

(2) Record Date.Only those holders of Common Stock of record at the close of business on August 11, 2006,10, 2007, are entitled to receive notice and to vote at the Annual Meeting or any adjournment or postponement thereof. On that date, there were 80,000,31681,062,112 shares of Common Stock issued and outstanding, held by approximately 2,3242,505 shareholders of record. These holders are entitled to one vote per share.

(3) Quorum.In order for any business to be conducted, the holders of a majority of the shares entitled to vote at the Annual Meeting must be present (a “Quorum”), either in person or represented by proxy. Abstentions and votes withheld, and shares represented by proxies reflecting abstentions or votes withheld, will be treated as present for purposes of determining the existence of a Quorum at the Annual Meeting. They will not be considered as votes “for” or “against” any matter for which the shareholder hasrespective shareholders have indicated their intention to abstain or withhold their vote.votes. Broker or nominee non-votes, which occur when shares held in “street name” by brokers or nominees who indicate that they do not have discretionary authority to vote on a particular matter, will not be considered as votes “for” or “against” that particular matter. Broker and nominee non-votes will be treated as present for purposes of determining the existence of a Quorum and may be entitled to vote on other matters at the Annual Meeting.

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(4) Voting Options. The sole proposal, which is the election of fourthree directors in Class III,I, will require the vote of the holders of a plurality of the shares of Common Stock represented and entitled to vote at the Annual Meeting at which a Quorum is present. Shareholders may (i) vote “for” each nominee, or (ii) “withhold authority” to vote for any nominee, or (iii) “withhold authority” to vote for all nominees. If a Quorum is present, a vote to “withhold authority” and a broker non-vote will have no effect on the outcome of the election of directors. The fourthree nominees receiving the most votes will be elected to serve as the Class IIII Directors for a three yearthree-year term.

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(5) Internet and Telephone Voting. Shareholders of record can simplify their voting and reduce the Company’sour costs by voting their shares via the Internet or by telephone. Shareholders may submit their proxy voting instructions via the Internet by accessing the website identified on the enclosed proxy card and following instructions on the website. Shareholders who choose to submit their proxy voting instructions by telephone should call the phone number identified on the enclosed proxy card and follow the prompts. The Internet and telephone voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to vote their shares, and to confirm that their instructions have been properly recorded. If your shares are held in the name of a bank or broker, the availability of Internet and telephone voting will depend on the voting processes of the applicable bank or broker; therefore, it is recommended that you follow the voting instructions on the form you receive. If you do not choose to vote via the Internet or by telephone, please date, sign, and return the proxy card.

(6) Default Voting.When a proxy is timely executed and not revoked, the shares represented by the proxy will be voted in accordance with the instructions indicated in the proxy. IF NO INSTRUCTIONS ARE INDICATED, HOWEVER, PROXIES WILL BE VOTED “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THE PROPOSAL.

The Board of Directors is not presently aware of any business to be presented for a vote at the Annual Meeting other than the proposal noted above. If any other matter properly comes before the meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is made, in their own discretion.

(7) Revocation of a Proxy.A shareholder’s submission of a proxy via the Internet, by telephone, or by mail does not affect the shareholder’s right to attend in person. A shareholder who has given a proxy may revoke it at any time prior to its being voted at the Annual Meeting by (i) delivering written notice of revocation to the Company’sour Corporate Secretary, Suellyn P. Tornay, at the Company’sour address listed on the first page of this proxy statement, (ii) properly submitting to the Companyus a duly executed proxy card bearing a later date, (iii) voting via the Internet or by telephone at a later date, or (iv) appearing at the Annual Meeting and voting in person; provided, however, that no such revocation under clause (i) or (ii) shall be effective until written notice of revocation or a later dated proxy card is received by the Corporate Secretary at or before the Annual Meeting, and no such revocation under clause (iii) shall be effective unless received on or before 11:59 p.m. Atlanta time1:00 a.m. Central Time on September 26, 2006.2007.

(8) Adjourned Meeting.If a Quorum is not present, the Annual Meeting may be adjourned by the holders of a majority of the shares of Common Stock represented at the Annual Meeting. The Annual Meeting may be rescheduled at the time of the adjournment with no further notice of the reconvened meeting if the date, time and place of the reconvened meeting are announced at the adjourned meeting before its adjournment; provided, however, that if a new record date is or must be fixed, notice of the reconvened meeting must be given to the shareholders of record as of the new record date. An adjournment will have no effect on the business to be conducted at the meeting.

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ELECTION OF DIRECTORS; NOMINEES

The Company’sOur Bylaws provide that the number of directors constituting the Board of Directors shall be not less than two nor more than twelve, as determined from time to time by resolution of the shareholders or of the Board of Directors. Our Board of Directors has adopted a resolution that the Board should have nine members. The Board of Directors of the Company currently consists of nine members, who are divided into three classes, with the term of office of each class ending in successive years. The Board of Directors have approved a resolution to increase the Board to ten members as of September 26,

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2006 and to add Ruth Ann Marshall to Class III. Each class of directors serves staggered three-year terms or until their respective successors are elected and qualified or until their respective earlier resignation, retirement, disqualification, removal from office or death.terms.

FourThree directors, in Class III, Alex W. Hart, William I Jacobs, Alan M. Silberstein,Edwin H. Burba, Raymond L. Killian, and Ruth Ann Marshall whose terms expire at the Annual Meeting, have been nominated for election at the Annual Meeting. Edwin H. Burba and Raymond L. Killian are members of Class I, and each of their terms expires at the Annual Meeting. Ruth Ann Marshall was elected in 2006 in Class III for a three-year term. At the time of her election, there were ten members on the Board, three members in each of Class I and Class II and four members in Class III. Mr. Betty, a member of Class I, died in January of 2007. As a result, Class I had only two remaining members, Class II had three members, and Class III had four members. Consequently, Ms. Marshall has been nominated for election again this year in Class I in order to ensure that the three classes are of equal size. The Class IIII Directors will be elected to hold office until the 20092010 annual meeting of shareholders, or until their respective successors have been duly elected and qualified, or until their respective earlier resignation, retirement, disqualification, removal from office or death. In the event that any of the nominees is unable to serve (which is not anticipated), the persons designated as proxies will cast votes for such other person(s) as they may select.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES FOR DIRECTOR.

The affirmative vote of the holders of a plurality of the shares of Common Stock represented and entitled to vote at the Annual Meeting at which a quorum is present is required for the election of each of the nominees. If a choice is specified on the proxy card by a shareholder, the shares will be voted as specified. If no specification is made, the shares will be voted “FOR” each of the fourthree nominees.

Certain Information Concerning the Nominees and Directors

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The following table sets forth the names of the nominees and the directors continuing in office, their ages, the month and year in which they first became directors of the Company, their positions with the Company, their principal occupations and employers for at least the past five years, any other directorships held by them in companies that are subject to the reporting requirements of the Securities Exchange Act of 1934 or any company registered as an investment company under the Investment Company Act of 1940, as well as additional information. There is no family relationship between any of the Company’sour executive officers or directors, and theredirectors. There are no arrangements or understandings between any of the Company’s executive officers orour directors and any other person pursuant to which any of them was elected an officer oras a director, other than arrangements or understandings with the directors and officers solely in their capacities as such. For information concerning membership on committees of the Board of Directors, see “Other Information Aboutabout the Board and its Committees” below.

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NOMINEES FOR DIRECTOR

Class IIII

Term Expiring Annual Meeting 20062007

Name and Age				Month and Year First Became a Director,				Positions with the Company, Principal Occupations During at Least the Past Five Years, and Other Directorships
		Edwin H. Burba, Jr. (70)		Director of the Company (since February 2001) National Security Leadership and Business Consultant (since 1993); Commander in Chief, Forces Command, United States Army (1989-1993); Commanding General, Combined Field Army of the Republic of Korea and United States (1988-1989).
		Raymond L. Killian (70)		Director of the Company (since September 2003) Chairman Emeritus, Investment Technology Group, Inc. (since March 2007) (1); Chairman, Investment Technology Group, Inc. (1997-2007); President and Chief Executive Officer, Investment Technology Group, Inc. (1995-2002 and 2004-2007); Executive Vice President, Jefferies Group, Inc. (1985-1995); Vice President, Institutional Sales, Goldman Sachs & Co. (1982-1985); Director, Voice Automation, Inc. and Partner, High Street Equity Advisors.
		Ruth Ann Marshall (53)		Director of the Company (since September 2006) President, Americas for MasterCard International (2000-2006) (2); Senior Executive Vice President, Concord, EFS (1995-1999); Director, American Standard Companies, Inc., Pella Corporation, and ConAgra, Inc.

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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE

Class II

Term Expiring Annual Meeting 2008

		Alex W. Hart (66)Name and Age		Month and Year First Became Director, Positions with the Company, Principal Occupations During at Least the Past Five Years, and Other Directorships
		February 2001Paul R. Garcia (55)		Chairman of the Board of the Company (since October 2002); Director, President and Chief Executive Officer of the Company (since February 2001); Chief Executive Officer of NDC eCommerce, a division of National Data Corporation (July 1999—January 2001); President and Chief Executive Officer of Productivity Point International (March 1997—September 1998); Group President of First Data Card Services (1995—1997); Chief Executive Officer of National Bancard Corporation (NaBANCO) (1989—1995).
		Gerald J. Wilkins (49)		Director of the Company (since November 2002) Chief Financial Officer, Habitat for Humanity International (since August 2007) (1); President, WJG Consulting, Inc. (2003-2007) (2); Executive Vice President and Chief Financial Officer of AFC Enterprises, Inc. (2000-2003) (3); Chief Financial Officer of AFC Enterprises, Inc. (1995-2000); Vice President, International Business Planning, KFC International (1993-1995).
		Michael W. Trapp (67)		Director of the Company (since July 2003) President, Sands Partners, Inc. (since 2000) (4); Managing Partner, Southeast area, Ernst & Young LLP (1993-2000); Director, The Ann Taylor Stores Corporation.

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Class III

Term Expiring Annual Meeting 2009

		Name and Age		Month and Year First Became Director, Positions with the Company, Principal Occupations During at Least the Past Five Years, and Other Directorships
		Alex W. Hart (67)		Director of the Company (since February 2001) Business Consultant (since October 1997); Chief Executive Officer of Advanta Corporation (1995-1997); Executive Vice Chairman of Advanta Corporation (1994); President and Chief Executive Officer of MasterCard International (1988-1994); Director, Fair Isaac Corporation and VeriFone, Inc.; Chairman of the Board and Director, Silicon Valley Bancshares.
William I Jacobs (64)(65)				February 2001				Director of the Company (since February 2001) Business Advisor (since August 2002); Managing Director and Chief Financial Officer of The New Power Company (2000-2002) (1); Senior Executive Vice President, Strategic Ventures for MasterCard International (1999-2000); Executive Vice President, Global Resources for MasterCard International (1995-1999); Executive Vice President, Chief Operating Officer, Financial Security Assurance, Inc. (1984-1994); Director, Alpharma Inc., Investment Technology Group, Inc., and Asset Acceptance Capital Corp.
Alan M. Silberstein (58)(59)				September 2003				Director of the Company (since September 2003) President, Allston Associates LLP (previously Silco Associates Inc.) (since October 2004) (2); President and Chief Operating Officer, Debt Resolve, Inc. (2003-2004) (3); President and Chief Executive Officer, Western Union (2000-2001); Chairman and Chief Executive Officer, Claim Services, Travelers Property Casualty Insurance (1996-1997); Executive Vice President, Retail Banking, Midlantic Corporation (1992-1995); Director, Debt Resolve, Inc. and Capital Access Network, Inc.

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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE

Class I

Term Expiring Annual Meeting 2007

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Class II

Term Expiring Annual Meeting 2008

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Other Information About the Board and its Committees

Meetings and Compensation(1) Meetings.. During the fiscal year ended May 31, 2006, the Company’s2007 (the 2007 fiscal year), our Board of Directors held six meetings. All directors attended at least 75% or more of the combined total of the Board of Directors meetings and meetings of the committees on which they served during the period for which the respective director served on the Board of Directors or the applicable committee.

(2) Fiscal Year 2007 Director Compensation. The Company hasfollowing table reflects the compensation payable to the outside directors of the Company. Since we do not offer any non-equity incentive plan compensation or any pension benefits to our directors, and there was no other compensation to be disclosed, columns (e), (f), and (g) have been eliminated.

DIRECTOR COMPENSATION

(3) Compensation Policy. We have a policy regarding the compensation of directors, which provides that a non-employee director who serves as the lead director is compensated at a rate of $60,000 per year in cash and receives Common Stockshares of the Company’s stock worth $50,000. A non-employee director who serves as the chairperson of the audit committee receives $40,000 in cash and shares of Common Stockstock worth $25,000. A non-employee director who serves as a chairperson of any other committee receives $35,000 in cash and shares of Common Stockstock worth $25,000. Each other non-employee director receives an annual retainer of $30,000 in cash and shares of Common Stockstock worth $25,000. All Common StockCompany stock issued pursuant to the director compensation policy is valued at the then-prevailing market price and is issued under the Company’sour Amended and Restated 2005 Incentive Plan.

Pursuant to the foregoing policy, Mr. Jacobs received 1,4821,284 shares of stock, and each of the other non-employee directors received 742640 shares of stock. Mr. Jacobs received $60,000, Mr. Trapp received $40,000, General Burba and Mr. Hart each received $35,000, and the remaining non-employee directors each received $30,000. Such stock is issued and cash is paid on the business day following each annual meeting of shareholders. By paying part of the annual consideration in stock, we believe that this encourages ownership of our stock by our directors.

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In addition, all non-employee directors received $1,500 per Board meeting attended, except for the lead director who received $2,500 per Board meeting. Non-employee directors who served on a committee received $1,500 per committee meeting, while the chairperson of such committee received $2,500 per committee meeting. Telephonic meetings and telephonic participation are compensated at $1,000 per meeting. The Company doesWe do not compensate a director who is also an employee of the Company for his or her services as a director. Directors were also compensated for their out-of-pocket expenses incurred in connection with attendance at Board and committee meetings. One of the Board meetings was held in the Company’s Hong KongToronto office. The spouses of the Board members were invited to attend, and the Companywe paid or reimbursed the directors for the applicable out-of-pocket expenses incurred.

(4) Amended and Restated 2000 Non-Employee Director Stock Option Plan. The Company maintainsWe maintain the Amended and Restated 2000 Non-Employee Director Stock Option Plan (the “2000 Director Plan”), which provides for the grant to each of the Company’sour non-employee directors of an option to purchase shares of Common Stock having a valuation according to the Black-Scholes option pricing model of $60,000. The purpose of the 2000 Director Plan is to advance the interests of the Company by encouraging ownership of common stockour Common Stock by non-employee directors, thereby giving such directors an increased incentive to devote their efforts to the success of the Company.our success. The options are granted to non-employee directors upon election or appointment to the Board and on the business day following each annual meeting of shareholders. Option grants under the 2000 Director Plan are pro-rated for partial years of service. All options granted in fiscal year 20062007 under the 2000 Director Plan will become exercisable in the aggregate, as to 25% of the shares after the first year, 25% after the second year, 25% after the third year, and 25% after the fourth year of service from the grant date, of the grant, except that such options will become fully exercisable upon the death, disability or retirement of the grantee, or upon the grantee’s failure to be re-nominated or re-elected as a director. Upon a grantee’s termination as a director for any reason, the options held by such person under the 2000 Director Plan will remain exercisable for five years or until the earlier expiration of the option. The exercise price for each option granted under the 2000 Director Plan will be the fair market value of the shares of Common Stock subject to the option on the date of the grant. Each option granted under the 2000 Director Plan will, to the extent not previously exercised, terminate and expire on the date which is 10 years after the grant date of grant of the option unless the 2000 Director Plan provides for earlier termination.During the fiscal year ended May 31, 2006 (and after being adjusted pursuant to2007, the Company’s 2-for-1 stock split which was completed on October 28, 2005), the eightnine non-employee directors received a stock option grant for the purchase of 4,7704,370 shares of the Company’s Common Stock at an exercise price of $33.7550$38.94 per share.

(5) Outstanding Options for Directors.The following table reflects the outstanding options (vested and unvested) for each non-employee director as of May 31, 2007. The value is calculated by multiplying the number of options outstanding by the difference between the value of our stock on May 31, 2007, which was $40.04, and the exercise price of the option.

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(6) Lead Director. The lead director’s duties generally include serving as the chairperson for all executive sessions of the non-management directors and communicating to the Chief Executive Officer the results of non-management executive Board sessions. Mr. Jacobs serves as the Company’sour lead director. Any interested party may contact the lead director by directing such communications to the lead directorhim at theour address of the Company (10 Glenlake Parkway, North Tower, Atlanta, Georgia 30328-3473). Any such correspondence received by the Companyus will be forwarded to Mr. Jacobs.

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(7) Director Independence. In July 2006,Each year the Board of Directors undertookundertakes a review of director independence based on the standards for director independence included in the New York Stock Exchange corporate governance rules. During this review, theThe Board consideredconsiders whether or not there existed any relationships and transactions during the past three years between each director or any member of his or her immediate family, on the one hand, and the Company and its subsidiaries and affiliates, on the other hand. The purpose of the review was to determine whether or not any such relationships and transactions existed and, if so, whether any such relationships or transactions were inconsistent with a determination that the director is independent. Based onIn fiscal year 2007, there were no such relationships or transactions between the non-employee directors and the Company to review and, as a result, the Board of Directors has determined that all of the directors, except Mr. Garcia (who serves as the Company’s President and Chief Executive Officer), are independent of the Company and its management. Mr. Betty, who served on the Board until his death in January 2007, was also an independent director.

(8) Committees. The Company’sOur Board of Directors has threea separately-designated standing committees; including an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee. The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board of Directors has determined that all members of suchthe three committees satisfy the independence requirements of the SEC and the New York Stock Exchange. Each of the Company’s committee charters and the Company’sour corporate governance guidelines are available on the Company’sour website (www.globalpaymentsinc.com), and will be provided free of charge, upon written request of any shareholder addressed to Global Payments Inc., 10 Glenlake Parkway, North Tower, Atlanta, Georgia 30328-3473, Attention: Investor Relations. Certain information regarding the functions of the Board’s committees and their present membership is provided below.

(9) Audit Committee. As of the end of fiscal year 2006,2007, the members of the Audit Committee were Mr. Trapp (Chairperson), Mr. Betty, Mr. Wilkins, and Mr. Silberstein. Mr. Betty served on such committee until his death in January of 2007. The Audit Committee operates under a written charter adopted by the Board of Directors which is available on the Company’sour website (www.globalpaymentsinc.com). The Audit Committee annually reviews a report by the independent auditors describing the firm’s internal quality control procedures,procedures; reviews the scope, and plan and the results of the annual audit of the financial statements by the Company’sour independent auditors,auditors; reviews the scope, plan and planresults of the internal audit program,program; reviews the nature and extent of non-audit professional services performed by the independent auditorsauditors; and annually recommends to the Board of Directors the firm of independent public accountants to be selected as the Company’sour independent auditors for the next fiscal year. During fiscal year 2006,2007, the Audit Committee held four meetings, each of which was separate from regular Board meetings.

(10) Audit Committee Financial Expert. The Board of Directors has determined that the chairman of the Audit Committee, Mr. Trapp, is an audit committee financial expert and is independent as independence for audit committee members is defined under the rules established by the SEC and the New York Stock Exchange and is independent, as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.Exchange.

(11) Compensation Committee. As of the end of fiscal year 2006,2007, the members of the Compensation Committee were General Burba (Chairperson), Mr. Hart, Mr. Jacobs, and Mr. Killian. The Committee also operates under a written charter which is available on the Company’sour website (www.globalpaymentsinc.com). This committee reviews levels of compensation, benefits, and performance criteria for the Company’sour executive officers and administers the Amended and Restated 2000 Long-TermLong Term Incentive Plan, the 2000 Employee Stock Purchase Plan, the 2000 Director Plan, and the Amended and Restated 2005 Long Term Incentive Plan. The Compensation Committee charter allows the Committee to delegate certain matters within its authority to individuals, and the Committee may form and delegate authority to subcommittees as appropriate. In addition, the Committee has the authority under its charter to retain outside advisors to assist the Committee in the performance of its duties, and for fiscal year 2007 the Committee retained the services of Hewitt Associates, an independent compensation consulting firm. The Compensation Discussion and Analysis section of this proxy describes our processes and procedures for the consideration and determination of executive compensation, including the role of the executive officers in determining compensation, and describes the role of Hewitt in more detail.

During fiscal year 2006,2007, the Compensation Committee also hired Hewitt to assist with a review of the director compensation for fiscal year 2008. The Compensation Committee, with Hewitt’s assistance, made

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recommendations to the full Board, which was approved and will take effect on September 27, 2007 and will remain in effect for three years. The executives have no role in determining Board compensation. During fiscal year 2007, the Compensation Committee held two meetings, both ofone meeting, which werewas separate from a regular Board meetings.meeting.

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(12) Compensation Committee Interlocks and Insider Participation. None of the members of the Compensation Committee has ever served as an officer or an employee of the Company or any of its subsidiaries.

(13) Governance and Nominating Committee.Committee. As of the end of fiscal year 2006,2007, the members of the Governance and Nominating Committee were Mr. Hart (Chairperson), General Burba, Mr. Jacobs, and Ms. Marshall. Mr. Betty.Betty served on such committee until his death in January of 2007. The Committee operates under a formal charter which is available on the Company’sour website (www.globalpaymentsinc.com). This committee is responsible for developing and recommending to the Board of Directors a set of corporate governance principles applicable to the Company,us, determining the structure of the Board and its committees, and for identifying, nominating, proposing, and qualifying nominees for open seats on the Board of Directors, based primarily on the following criteria:

In evaluating nominees, the Committee will also take into account the consideration that members of the Board of Directors should collectively possess a broad range of skills, expertise, industry knowledge and other knowledge, business experience and other experience useful to the effective oversight of our business.

The Governance and Nominating Committee does not consider or accept nominees to the Board of Directors nominated by shareholders. The Governance and Nominating Committee may useconsiders candidates for director who are recommended by other members of the Board of Directors and by management, as well as those identified by any outside consultants retained by the committee to assist in identifying possible candidates. Ruth Ann Marshall, the Company’s only nominee to the Board who has not previously been elected by the shareholders, was recommended by a non-management director.

Members of the Governance and Nominating Committee must discuss and evaluate possible candidates prior to recommending them to the Board. This committee had one formal meeting during fiscal year 2006,2007, and such meeting was separate from a regular Board meeting.

(14) Communications from Security Holders. Any security holder may contact any member of the Board of Directors by directing such communication to such boardBoard member at theour address of the Company (10 Glenlake Parkway, North Tower, Atlanta, Georgia 30328-3473). Any such correspondence received by the Companyus shall be forwarded to the applicable Board member.

(15) Attendance at Annual Meeting. All directors are expected to attend the Company’sour annual meeting of shareholders. On the date of the fiscal year 20052006 annual shareholder meeting, there were nineten members on the Company’sour Board of Directors, and eightall ten members were present at the meeting.

Certain Legal Proceedings. William I Jacobs, a member of the Board of Directors, was the Chief Financial Officer and Managing Director of The New Power Company, a subsidiary of NewPower Holdings, Inc. Both The New Power Company and NewPower Holdings, Inc. filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Georgia on June 11, 2002.

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Common Stock OwnershipCERTAIN INFORMATION CONCERNING THE EXECUTIVE OFFICERS

The following table sets forth the names of our executive officers, their ages, their positions with the Company, and their principal occupations and employers for at least the past five years. There are no arrangements or understandings between any of our executive officers and any other person pursuant to which any of them was elected an officer, other than arrangements or understandings with our officers acting solely in their capacities as such. Our executive officers serve at the pleasure of our Board of Directors.

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COMMON STOCK OWNERSHIP OF MANAGEMENT

The following table sets forth information as of July 31, 2006,August 10, 2007, with respect to the beneficial ownership of the Company’s Common Stock by the nominees to the Board, by the directors of the Company, by each of the persons named in the Summary Compensation Table, and by the 1516 persons, as a group, who were directors and/or executive officers of the Company on July 31, 2006. The numbers referenced in the table below reflect the Company’s 2-for-1 stock split which was completed on October 28, 2005.August 10, 2007.

Except as explained in the footnotes below, the named persons have sole voting and investment power with regard to the shares shown as beneficially owned by them.

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Common Stock Ownership by Certain Other PersonsCOMMON STOCK OWNERSHIP BY CERTAIN OTHER PERSONS

The following table sets forth information as of the date indicated with respect to the only persons who are known by the Company to be the beneficial owners of more than 5% of the outstanding shares of Common Stock.

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REPORT OF THE COMPENSATION COMMITTEEAND OTHER BENEFITS:

DecisionsCOMPENSATION DISCUSSION AND ANALYSIS

In the paragraphs that follow, we will give an overview and analysis of our compensation program and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions. Following this section, you will find a series of tables containing specific information about the compensation earned or paid in fiscal year 2007 to the following individuals, to whom we refer as our “Named Executive Officers” for the purposes of this proxy.

Paul R. Garcia—Chairman, President, and Chief Executive Officer

Joseph C. Hyde—Executive Vice President and Chief Financial Officer

James G. Kelly—Senior Executive Vice President and Chief Operating Officer

Carl J. Williams—President—World-wide Payment Processing

Suellyn P. Tornay—Executive Vice President and General Counsel

The discussion below is intended to help you understand the detailed information provided in those tables and put that information into context within our overall compensation program.

We design our compensation program with a view to retaining and attracting executive leadership of a caliber and level of experience necessary to effectively manage our complex, global businesses. Our objective is to have a compensation program that will allow us to:

In order to do this effectively, our program must:

Opportunities for at-risk compensation are market-based, while actual payments are performance-based. The target levels of the program are based on competitive market data. The amount that is paid to an executive considers company and individual performance. This policy results in actual compensation that is appropriate given our level of performance.

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The Compensation Committee retained an independent compensation consultant from Hewitt Associates. The consultant reports directly to the Compensation Committee. She advises the Compensation Committee on current and future trends and issues in executive compensation and equity-based planson the competitiveness of the compensation structure and levels of our executives, including the Named Executive Officers. At the request of the Committee and to provide context for the Committee’s compensation decisions made for fiscal year 2007, Hewitt performed the following services for the Committee late in fiscal year 2006:

We consider the compensation levels, programs, and practices of certain other companies to assist us in setting our executive compensation so that it is market competitive. In fiscal year 2007, the following peer group was utilized for this purpose. All of the companies in the peer group are in the transaction processing or the data services business.

The Compensation Committee annually reviews and updates the list of companies comprising the peer group to assure we have the right marketplace focus.

Before the Compensation Committee met in executive session to set fiscal year 2007 compensation, the independent consultant collected and analyzed comprehensive market data for its use. The consultant presented size-adjusted market values for base salary, short term incentives, and long term incentives, using peer group proxy data as the primary data source and supplementing it as necessary with general industry information from Hewitt’s proprietary executive compensation database. The results of the analysis were that fiscal year 2006 total compensation for our Named Executive Officers (at target performance levels) fell within a ten percent range of the size-adjusted 50^th percentile of the market for similar jobs, except for Mr. Hyde. Mr. Hyde’s total targeted compensation was 17% below the median for his position. As a result, the Compensation Committee increased both his base pay and long term incentive award to bring his fiscal year 2007 total compensation more in line with targeted market levels.

Our Chief Executive Officer (Paul R. Garcia), with the assistance of our human resources department, develops compensation recommendations for the executive officers (other than himself) based upon market data

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supplied by the independent consultant, the Company’s performance relative to goals approved by the Compensation Committee, individual performance versus personal objectives, and individual contributions to the Company’s performance. Mr. Garcia is not involved in determining his own compensation. The Compensation Committee reviews and approves all compensation elements for the executive officers and sets the compensation of the CEO, after receiving advice from the independent consultant.

The following elements comprise our compensation program for executives:

The Compensation Committee does not have a policy with regard to the allocation among the major elements of compensation, including base salary, short term incentives, and long term incentives.

(1) Base Salary. Base salary provides our executive officers with a level of compensation consistent with their skills, responsibilities, experience and performance in relation to comparable positions in the marketplace. Base salary is the one fixed component of our executives’ compensation. The Compensation Committee reviews the base salaries of our executive officers annually. Prior to fiscal year 2007, both Ms. Tornay and Mr. Hyde fell more than ten percent below the median of the market. As a result, each received base salary increases of 15.4% and 7.7%, respectively, for fiscal year 2007. The other Named Executive Officers received increases of between 4% and 5%.

Recommendations for fiscal year 2007 were discussed and approved at the June 2006 Compensation Committee meeting. The Committee met in executive session to discuss the increase for Mr. Garcia and the other executives. Base salary increases for the executives are effective on June 1 of each year.

(2) Short Term Incentives. We provide our Named Executive Officers with short term incentives to motivate and reward them for the achievement of the Company’s defined business goals and objectives and to reward individual performance. Our short term incentive program includes an annual performance plan and our commitment and accountability program.

(a)Annual Performance Plan. The annual performance plan provides an opportunity for executives to earn variable at-risk cash compensation. Each executive is assigned a target award opportunity, expressed as a percentage of base salary. The fiscal year 2007 target opportunities for our executive officers are between 9% and 14% lower than the market levels provided by the consultant. The target opportunity for each executive was as follows: Mr. Garcia—70% of his base salary or $546,000; Mr. Hyde—50% of his base salary or $175,000; Mr. Kelly—55% of his base salary or $264,000; Mr. Williams—50% of his base salary or $210,000; and Ms. Tornay—45% of her base salary or $135,000. The amount of the annual performance payment could range from zero to 164% of the target opportunity for each of the executives, which is further described in the paragraphs below.

For fiscal year 2007, there were three weighted components of the annual performance plan. There were two Company objectives, which included diluted earnings per share (EPS) and revenue goals, and a set of individual objectives that varied from person to person. The diluted EPS target was 40% of the award for Mr. Garcia and 30% for the other executives, and the revenue target was 20% of the award for all executives, including

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Mr. Garcia. The individual goals represented 40% of Mr. Garcia’s opportunity and 50% of the opportunity for the other executives. Mr. Garcia’s relative weighting differed from that of the other executives because the Compensation Committee determined that a higher percentage of the CEO’s opportunity should be tied to Company performance than to his individual objectives. The relative weighting is set forth in the chart below:

The three parts of the annual performance plan were calculated separately. The target opportunity was allocated among the three elements based upon the table above.

Depending upon the diluted EPS results, each executive could earn from zero to 200% of the target opportunity apportioned to the diluted EPS target. Depending upon the revenue results, each executive could earn from zero to 200% of the target opportunity apportioned to the revenue target. Depending upon the accomplishment of individual goals, Mr. Garcia could earn from zero to 110% of the target opportunity apportioned to the individual component and the other executives could earn from zero to 128% of the individual target opportunity. Actual payouts are determined in late July or early August following the completion of the applicable fiscal year. Once calculated, all bonus payments are rounded up to the next even $1,000 increment.

For example, if an executive (other than Mr. Garcia) made a base salary of $200,000 per year, and his target bonus was 50% of his base salary, his target bonus would be $100,000. Based upon the relative weighting set forth in the table above, the target bonus would be apportioned $30,000 for diluted EPS results (30%), $20,000 for revenue results (20%), and $50,000 for individual goals (50%). The executive’s target diluted EPS payout was $30,000, so he could earn from zero to 200% (or from $0 to $60,000) for this portion of the bonus. The executive’s target revenue bonus was $20,000, so he could earn from zero to 200% (or from $0 to $40,000) for this portion of the bonus. Finally, the executive’s target bonus for individual goals was $50,000, so he could earn from zero to 128% (or from $0 to $64,000) for performance against individual goals.

(i) Diluted EPS Payout

The following table contains the range of diluted EPS goals for fiscal year 2007 and the applicable payout percentages. The diluted EPS goals exclude the impact of restructuring and other non-recurring charges. For clarity, the diluted EPS goals include the impact of our adoption of FAS 123R on June 1, 2006, which requires the recognition of stock option expenses.

The actual diluted EPS results for the Company for fiscal year 2007 was $1.77 (excluding the impact of restructuring and other non-recurring charges of $0.02). Using straight line interpolation, the payout was 183% of the target amount of the bonus apportioned to diluted EPS results. The diluted EPS performance resulted in the following payouts to the Named Executive Officers: Mr. Garcia—$400,327; Mr. Hyde—$96,233; Mr. Kelly—$145,174; Mr. Williams—$115,479; and Ms. Tornay—$74,237.

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(ii) Revenue Payout

The following table contains the range of revenue goals for fiscal year 2007 and the applicable payout percentages.

The actual revenue for the Company for fiscal year 2007 was $1,062 million (which represents an increase of 17% over fiscal year 2006). Using straight line interpolation, the payout was 83.21% of the target amount of the bonus apportioned to revenue results. The revenue performance resulted in the following payouts to the Named Executive Officers: Mr. Garcia—$90,871; Mr. Hyde—$29,125; Mr. Kelly—$43,938; Mr. Williams—$34,950; and Ms. Tornay—$22,468.

(iii) Payout Based upon Individual Performance Objectives

The last portion of the bonus payout was based upon individual performance objectives. Mr. Garcia could earn from zero to 110% and each of the other executives could earn from zero to 128% of the payout amount allocated to individual performance. Individual performance objectives are established annually in writing. The Compensation Committee and the Lead Director set the individual performance objectives for the CEO, and the CEO approves the individual objectives for the other executives. Examples of actual individual performance objectives for our Named Executive Officers for fiscal year 2007 included:

This individual assessment promotes accountability for each executive’s personal performance and helps differentiate our executives’ compensation based on individual contributions. At the end of the year, the CEO reviews the performance of each Named Executive Officer (other than himself) against his or her objectives and makes a recommendation to the Compensation Committee regarding this portion of the bonus. The Lead Director and the Compensation Committee reviews Mr. Garcia’s performance against his objectives and determines the amount payable. Based upon the performance against such objectives, the payouts were as follows: Mr. Garcia—$240,240; Mr. Hyde—$109,929; Mr. Kelly—$126,720; Mr. Williams—$134,400; and Ms. Tornay—$72,374.

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(iv) Summary of the Annual Performance Plan

The following charts summarize what is explained above:

For Mr. Garcia:

For the Executives (other than Mr. Garcia):

(b)Commitment and Accountability Awards.In addition to the annual performance plan, the executives can earn discretionary bonuses pursuant to what we call our “commitment and accountability program.” These bonuses are paid for specific accomplishments during the year that were not anticipated at the beginning of the year or were in addition to the executive’s individual objectives. Examples of accomplishments included in this category were to reward extraordinary effort associated with (1) the closing of a complex, multi-national acquisition and (2) the negotiation and consummation of a long term renewal of a business relationship important to the Company. In 2007, the following discretionary bonuses were paid: Mr. Hyde—$25,000, Mr. Kelly—$35,000, and Ms. Tornay—$40,000.

3. Long Term Incentive Program.Each year the Company grants Long Term Incentive Awards, which we refer to as LTIs, to executives and other key employees throughout the Company. All LTI grants are made pursuant to our Amended and Restated 2005 Incentive Plan, the material terms of which were approved by our shareholders. All grants of LTIs to the Named Executive Officers are approved by the Compensation Committee. AllWe believe the LTIs align the executives’ interests with those of the shareholders by linking their compensation to the stock price.

We made our fiscal 2007 LTI decisions so that the total target compensation for each of our Named Executive Officers would be within ten percent of the median of the market. The only Named Executive Officer whose total compensation for fiscal year 2007 is more than 10% above the median of the market is Mr. Williams, which is due to his LTI grant, and which we believe to be appropriate in light of his expatriate status.

In fiscal year 2007, the LTIs granted to the executives included stock options as well as performance-based restricted stock units. Fiscal year 2007 was the first year in which we offered a combination of options and performance-based restricted stock units as part of the annual grant. As a result, in determining the appropriate allocation of the grant to stock options and performance-based restricted stock units, we first converted the grant value assigned to each executive into the number of stock options that would have been granted under our previous year’s policy. Then, we applied the formula described below to allocate the grant between stock options and performance-based restricted stock units. To determine the number of options that would have been granted pursuant to last year’s policy, we established the LTI grant value assigned to each executive. Then, we referred to the closing price of the stock on the date of the grant ($45.86) and multiplied it by 40% to derive an estimated per-share grant value, which was $18.34. We then divided the grant value assigned to each executive by the

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estimated per-share grant value ($18.34) to derive the number of stock options that would have been granted under the previous year’s policy. We then divided that number in half to determine the number of options. We took the other half and multiplied it by 33.33% to determine the number of performance-based restricted stock units that would be issued.

For example, if an executive’s LTI grant value was $110,040, we would have divided $110,040 by the estimated per-share grant value of $18.34, and the executive would have received 6,000 options under the previous year’s policy. For fiscal year 2007, the executive would have received 3,000 options at an exercise price of $45.86 and 1,000 performance-based restricted stock units.

The formula for Mr. Garcia was slightly different. As with all the executives, once the grant value was determined, we divided it by the estimated per-share grant value to determine the number of options that would have been granted pursuant to last year’s policy. We multiplied that number by approximately 40% to determine the number of options, and the remainder (approximately 60%) was multiplied by 33% to determine the number of performance-based restricted stock units. We allocated a greater portion of his award to performance-based restricted stock units for retention purposes.

(a) Stock Options. We believe stock options provide an incentive for long term creation of shareholder value. Stock options only have value to the extent the price of the Company’s stock appreciates relative to the exercise price. The exercise price is the closing price of the stock on the grant date. We do not grant discounted options or re-price existing options. The granted stock options vest over a four-year period at a rate of 25% per year. During fiscal year 2007, the Compensation Committee relatingapproved the following stock option grants for each of the Named Executive Officers:

(b) Performance-Based Restricted Stock Units. We added performance-based restricted stock units to our long term incentive program in order to motivate employees and to reward the compensationachievement of specified financial or market goals. In addition, we believe that this type of award will encourage increased stock ownership among the executives. Performance-based restricted stock units are converted into a stock grant only if the Company’s performance during the fiscal year exceeds pre-established goals. At the beginning of fiscal year 2007, executives were each granted a target number of performance units attributable to diluted EPS results and a target number of performance units relative to revenue results. The following is a table summarizing the target performance units granted during fiscal year 2007.

Depending on the diluted EPS and revenue results, the executives could earn from 0% to 125% of the applicable target amount.

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(i) Portion Attributable to Diluted EPS Results

The following table contains the diluted EPS goals and the applicable reward amounts for fiscal year 2007. The diluted EPS goals exclude the impact of restructuring and other non-recurring charges. For clarity, the diluted EPS goals include the impact of the Company’s adoption of FAS 123R on June 1, 2006, which requires the recognition of stock option expenses.

The actual diluted EPS results for the Company for fiscal year 2007 was $1.77 (excluding the impact of restructuring and other non-recurring charges of $0.02). Using straight line interpolation, the payout was 120.83%. As a result, each of the executives received the following number of performance units: Mr. Garcia—21,750; Mr. Hyde—4,350; Mr. Kelly—7,250; Mr. Williams—5,800; and Ms. Tornay—2,900.

(ii) Portion Attributable to Revenue Results

The following table contains the revenue goals and the applicable award amounts for fiscal year 2007.

The actual revenue for the Company for fiscal year 2007 was $1,062 million, which represented a 17% increase over fiscal year 2006 results. Using straight line interpolation, the payout was 91.79%. This resulted in each of the executives receiving the following number of performance units: Mr. Garcia—11,015; Mr. Hyde—2,203; Mr. Kelly—3,672; Mr. Williams—2,937; and Ms. Tornay—1,469.

(iii) Conversion from Performance Units into Restricted Stock

Once the number of performance units earned was determined for each executive, officers are made bythe units were converted into shares of restricted stock with the following vesting schedule: 25% vested immediately and the remaining 75% of the shares to vest in three equal installments over the next three years.

(4) Retirement Benefits. The only retirement benefit provided to all of our executives consists of the Company’s 401(k) plan. We also maintain a pension plan that was available to all employees but was closed to new employees hired after June 1, 1998. Ms. Tornay is the only Named Executive Officer who was hired before such time and, therefore, is the only Named Executive Officer who participates in the pension plan. Additional information regarding the pension plan is contained in the Compensation Committee. DecisionsTables and Narratives section under the heading “Pension Benefits.”

(5) Other Benefits. The Named Executive Officers are eligible to participate in other health and welfare programs that are available to substantially all full-time salaried employees. The only other benefits are limited perquisites, which are set forth in footnote (3) to the Summary Compensation Table contained in the Compensation Tables and Narratives section.

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We only offer employment agreements to a limited number of key employees, which includes the Named Executive Officers. We believe this is necessary in order to retain and attract highly-qualified executives, but we also believe that the employment agreements provide benefit to the Company. Each of the Named Executive Officers who is a party to an employment agreement has agreed not to disclose confidential information or compete with us, and not to solicit our customers or recruit our employees, for a period of 24 months following the termination of his or her employment. In exchange, we offer limited income and benefit protections to the executive. Additional information regarding the terms of these agreements is contained in the Compensation Tables and Narratives section under the heading “Employment Agreements.”

In fiscal year 2007, the Compensation Committee relatedrequested that the independent consultant from Hewitt review the employment agreements between the Company and the executives. The review indicated the provisions in the agreements were balanced in terms of the executives’ interests and the Company’s interests and that the termination and change-in-control provisions were conservative when compared to equity-basedmarket.

Historically, we have not timed the grant of equity awards to coincide with, precede, or follow the release of material non-public information. For fiscal year 2008 and thereafter, our policy is to make the annual grant to all eligible employees on the next business day following the filing of our annual report on Form 10-K.

Perquisites are a minor aspect of the compensation program. We believe the limited perquisites we offer are consistent with other companies. The perquisites offered by the Company are set forth in footnote (3) to the Summary Compensation Table contained in the Compensation Tables and Narratives section. We believe that, considered both individually and in the aggregate, the perquisites we offer to our Named Executive Officers are reasonable and appropriate.

In fiscal year 2008, the Compensation Committee implemented stock ownership guidelines for executives. We believe this fosters Common Stock ownership and aligns the interests of our executives with our shareholders. Within five years of the later of (1) June 1, 2007 or (2) the executive’s initial appointment to his or her position, each executive should own shares of Common Stock valued as a percentage of base salary as follows: CEO—5 times base salary, and the other executives—2 times base salary.

Section 162(m) of the U.S. Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to any one of our Named Executive Officers. However, qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met. To maintain flexibility in compensating our executives, the Compensation Committee reserves the right to use its judgment to authorize compensation payments that may be subject to the limit when the Compensation Committee believes that such payments are appropriate. Accordingly, certain components of our executive compensation program are designed to be qualifying performance-based compensation under 162(m) while others are not.

There are very limited circumstances under which we gross-up a benefit to compensate an executive for the taxes payable on such benefit. We do gross up a portion of the fees paid in connection with financial planning

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and amounts paid in connection with the executive’s attendance at the Company’s President’s Club and Chairman’s Club award trips. We also provide a gross-up for excise taxes that may be due with respect to the change of control provisions contained in the employment agreements, which is described in the Compensation Tables and Narratives section under the sub-heading “Summary of Employment Agreements.”

We account for all compensation paid in accordance with GAAP. The accounting treatment is not expected to have a material affect on the selection of forms of equity compensation or on other compensation decisions.

We continue to monitor the regulatory developments under Internal Revenue Code Section 409A, which was enacted as part of the American Jobs Creation Act of 2004. Section 409A imposes substantial limitations and conditions on nonqualified deferred compensation plans, are made solely by that committeeincluding certain types of equity compensation and separation pay arrangements. We intend to amend our employment agreements, if necessary, in order to ensure their full compliance with Section 409A before the current transition period expires on December 31, 2007.

The Compensation Committee approved changes to some elements of the compensation program for awards or grants underfiscal year 2008. Four significant changes are discussed below. There were two changes to the Company’s equity-based plansannual performance plan, which included (1) an increase to satisfy Rule 16b-3each Named Executive Officer’s target bonus opportunity and (2) a shift in the relative weight assigned to each of the three parts of the plan, which are diluted EPS goals, revenue goals, and individual objectives.

The bonus opportunity, at target, for each of the Named Executive Officers will increase to 80% for Mr. Garcia, to 55% for Mr. Hyde, to 60% for Mr. Kelly, to 55% for Mr. Williams, and to 50% for Ms. Tornay. As mentioned earlier, the data provided by the independent compensation consultant indicated that the target opportunities for our executives were from 9% to 14% below the market median, and the Compensation Committee determined that such an increase was necessary to ensure the target opportunities offered to our executives are competitive with the marketplace.

The relative weighting has also changed for fiscal year 2008 to the following:

The Compensation Committee determined that a greater amount of each executive’s award opportunity pursuant to the Securities Exchange Act of 1934, as amended.annual performance plan should be tied to Company performance and a lesser amount to individual objectives.

The Company’s primary objectiveCompensation Committee also approved two modifications to our long term incentive program. The first such modification was to change the formula that allocates the long term incentives between stock options and performance-based restricted stock units. Such formula will result in designing and implementing its compensation programs is to maximize shareholder value over time through alignment of employee performance with business goals and strategies that serve shareholders’ interests. The overall goal75% of the Compensation Committee isLTI award value to develop executive compensationbe allocated to performance-based restricted shares and equity-based programs which are consistent with and linked25% of the award value to be allocated to options. The second such modification was to add a third objective to the Company’s strategiccriteria for the long term incentive plan. In fiscal year 2007, we based our awards on revenue and annual businessdiluted EPS goals. For 2008, the objectives will be revenue, diluted EPS, and operating income margin, which will align our LTI awards with our long term operating objectives.

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Compensation PhilosophyCOMPENSATION COMMITTEE REPORT

The Compensation Committee has adopted certain principles which are applied in structuring the compensation opportunity for executive officers. These are:

Long-Termmet with management to review and At-Risk Focus. A significant percentage of total compensation for executive officers should be composed of long-term, at-risk rewards to focus senior management on the long-term interests of shareholders. Equity-based plans should comprise a major part of the long-term, at-risk portion of total compensation to encourage shareholder value-based management decisions and to link compensation to Company performance and shareholder interests.

Short-Term and At-Risk Focus. A significant portion of cash compensation for executives is linked to achievement of annual business plans or performance objectives. This includes cash bonuses that are approved bydiscuss the Compensation Discussion and Analysis. Based on such review and discussion, the Committee relatingrecommended to those objectives. Our executive officers face real risk of not receiving bonuses under this plan, which also recognizes variability in individual and overall Company performance.

Competitiveness. Base pay and total compensation should be competitive with other similar companies based upon size, products and markets. A survey of peer group companies is conducted periodically.

Stock Option Awards, Restricted Stock Grants, and Bonus Deferral Program

Equity-based compensation comprises a significant portion of the Company’s key employee compensation programs. The Company’s 2005 Incentive Plan, is utilized for this component of executive officer, long-term, equity-oriented compensation. Such plan is administered solely by the Compensation Committee and has historically included stock options and restricted stock grants:

Stock Options.Options provide key employees with the opportunity to achieve an equity interest in the Company. Stock options are granted at 100% of fair market value on the date of grant and have 10-year terms. Stock options granted during the 2006 fiscal year vest one year after the date of grant with respect to 25% of the shares granted, an additional 25% after two years, an additional 25% after three years, and the remaining 25% after four years. The objective is to emphasize a long-term focus by key employees in the acquisition and holding of Common Stock. The number of stock options granted to an individual is based upon the individual’s potential to contribute to future growth of the Company. The frequency and size of individual grant amounts vary.

Restricted Stock. Restricted stock grants are designed to be granted on a selective basis to key employees to further focus them on the longer-term performance of the Company. Generally, grants of restricted shares are subject to forfeiture if a grantee, among other conditions, leaves the Company prior to expiration of the restricted period. Generally, the restrictions lapse two years after the date of grant with respect to 33% of the shares granted, an additional 33% after three years, and the remaining 33% after four years. There are occasional exceptions to the vesting schedule.

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Bonus Deferral Program.A bonus deferral program, approved by the Board of Directors allows certain executivesthat the Compensation Discussion and Analysis be included in this proxy statement, which is to defer a portion of their cash bonus in the form of a restricted stock grant. This program is consistent with the Company’s objectives to increase executives’ share ownership and at-risk compensation. Since participating executives are deferring earned cash in the form of shares at risk of forfeiture over three years, the amount deferred is increasedbe incorporated by 35%. None of the named executive officers participated in the planreference into our annual report on Form 10-K for fiscal year 2006.2007.

Chief Executive Officer’s Compensation

Mr. Garcia’s fiscal year 2006 compensation is derived primarily from annual performance plans, as well as commitments under his Employment Agreement effective July 12, 2000 (see “Employment Agreements with Paul R. Garcia, James G. Kelly, Carl J. Williams, and Joseph C. Hyde” below).

Mr. Garcia’s potential bonus award is reviewed annually and is based upon achievement of certain quantitative and qualitative performance objectives. Mr. Garcia agreed to have his bonus at risk under this plan to preserve deductibility by the Company under Code Section 162(m). The performance objectives in the plan for the 2006 fiscal year included objectives for earnings per share growth and revenue growth. The balance of his 2006 fiscal year bonus was determined by other objectives.

The Compensation Committee’s general approach in setting Mr. Garcia’s annual compensation opportunity is to seek to be competitive with other companies in the Company’s industry, and for his compensation plan to be consistent with the Company’s business, strategy, and operating results. The Compensation Committee also seeks to have a large percentage of Mr. Garcia’s compensation opportunity based upon current year performance as well as actions to provide sustained long-term growth in shareholder value. To accomplish this, a mix of cash, restricted stock and stock options are provided to Mr. Garcia, which provides a significant element of risk based upon the Company’s performance.

COMPENSATION COMMITTEE

Edwin H. Burba, Jr., Chairperson

Alex W. Hart

William I Jacobs

Raymond L. Killian Jr.

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COMPENSATION TABLES AND OTHER BENEFITSNARRATIVES

The following table presents certain summary information concerning compensation paid or accrued by the Company for services rendered in all capacities during the fiscal yearsyear ended May 31, 20062007 (“20062007 fiscal year”), May 31, 2005 (“2005 fiscal year”), and May 31, 2004 (“2004 fiscal year”), for (i) the Chief Executive Officerprincipal executive officer of the Company; and(ii) the principal financial officer of the Company (ii) each of the fourthree other most highly compensated executive officers of the Company (determined as of the end of the last fiscal year), and (iv) one additional individual who was a named executive officer for part of the fiscal year but whose total annual salary and bonus exceeded $100,000.employment ended on September 8, 2006. Each person listed in (i) and (ii)through (iv) above are hereinafter referred to as theour “Named Executive Officers”. The options granted which are reflected in this table were granted before the Company’s 2-for-1 stock split which took place on October 28, 2005 and are reflected on a pre-split basis.Officers.”

SUMMARY COMPENSATION TABLE

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ALL OTHER COMPENSATION

[Remainder of Page Intentionally Left Blank]

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Option Grants in Last Fiscal Year

The following table sets forth information concerning option grants of plan-based awards during the 20062007 fiscal year to the Named Executive Officers. A detailed description of the Non-Equity Incentive Plan Awards disclosed in this table under columns (c), (d), and (e) is contained in the Compensation Discussion and Analysis section under the sub-heading “Annual Performance Plan.” A detailed description of the Equity Incentive Plan Awards disclosed in this table under columns (f), (g), and (h) is contained in the Compensation Discussion and Analysis section under the sub-heading “Performance-Based Restricted Stock Units.”The actual results and the payouts realized under both types of awards are also described in that section. Since there were no other stock awards or units granted to the Named Executive Officers in fiscal year 2007, column (i) from the table has been eliminated.

OPTION GRANTS IN LAST FISCAL YEAROF PLAN-BASED AWARDS

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The following table provides the outstanding equity grants for each Named Executive Officer on May 31, 2007. The table includes outstanding equity grants from past years as well as current year equity grants. Since the Company has not issued options pursuant to an equity incentive plan referred to in column (d), that column has been eliminated.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

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