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** **

 

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**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**Form 10-K/A**

**Amendment No. 1**

** **

| **x**      | ** ** | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|       | ** ** | **For the fiscal year ended December 31, 2008**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **or**     |
|       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **o**      | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|       | ** ** | **For the transition period  from                                                                                       to** |

 

**Commission File No. 0-22701**

 

**GEVITYHR, INC.**

(Exact name of registrantas specified in its charter)

* *

| **Florida**                                                     | ** ** | **65-0735612**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other jurisdiction of

incorporation or organization) |       | (I.R.S. Employer

Identification No.) |
|                                                            |       |                                  |
| **9000 Town Center Parkway**                                    | ** ** | ** **                            |
| **Bradenton, Florida**                                          |       | **34202**                             |
| (Address of principal executive offices)                        |       | (Zip Code)                            |

 

(Registrant’s Telephone Number, IncludingArea Code):

**(941) 741-4300**

 

Securities Registered Pursuant to Section 12(b) ofthe Act:

 

| **Title  of Each Class**                    | ** ** | **Name  of Each Exchange on Which Registered** |
|---------------------------------------------|------------|------------------------------------------------|
| **Common Stock, par value $0.01 per share** | ** ** | **The NASDAQ Stock Market LLC**                |
| **Common Stock Purchase Rights**            | ** ** | ** **                                     |

 

Securities Registered Pursuant to Section 12(g) ofthe Act:

 

**None**

 

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act. Yes o No x

 

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act. Yes o No x 

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

Yesx No o

 

Indicate by check mark whether the registrant has submittedelectronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (orfor such shorter period that the registrant was required to submit and postsuch files). Yes oNo o

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reportingcompany.  See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act. 

|   | Large  accelerated filer o                                            | Accelerated  filer x        |
|--------|-----------------------------------------------------------------------|-----------------------------|
|   | Non-accelerated  filer (do not check if a smaller reporting company)o | Smaller reporting company o |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Act).  Yes o   No x

 

Asof June 30, 2008, the last business day of the registrant’s most recentlycompleted second fiscal quarter, the aggregate market value of the registrant’scommon stock held by non-affiliates, based upon the closing price per share forthe registrant’s common stock as reported on the Nasdaq Global Select Market,was approximately $106.5 million.

 

Thenumber of shares of the registrant’s common stock, outstanding as of April 13,2009, was 24,725,422.

 

 

 

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**EXPLANATORY NOTE**

 

This Amendment No. 1 onForm 10-K/A amends our Annual Report on Form 10-K for the fiscal yearended December 31, 2008, initially filed with the U.S. Securities andExchange Commission (the “SEC”) on March 16, 2009, to include certaininformation required by Part III Items 10 through 14, which was notincluded in our Proxy Statement, filed on April 15, 2009.  Item 15 of Part IV of the original Form 10-Khas also been amended to contain currently dated certifications as required bySEC rules from our chief executive officer and chief financial officer.

 

Unless otherwise specifically identified as the original Form 10-K orthe Form 10-K/A, any references to the Form 10-K made throughout thisdocument shall refer to the Form 10-K filed with the SEC on March 16,2009, as amended by this Amendment No. 1.

 

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**TABLEOF CONTENTS**

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| **PART III** | ** **                                                                                       | ** ** |
|-------------------|--------------------------------------------------------------------------------------------------|------------|
| ITEM 10.          | Directors, Executive  Officers and Corporate Governance                                          | 4          |
| ITEM 11.          | Executive  Compensation                                                                          | 11         |
| ITEM 12.          | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters | 32         |
| ITEM 13.          | Certain  Relationships and Related Transactions, and Director Independence                       | 36         |
| ITEM 14.          | Principal  Accountant Fees and Services                                                          | 37         |
| **PART IV**  | ** **                                                                                       | ** ** |
| ITEM 15.          | Exhibits,  Financial Statement Schedules                                                         | 38         |

 

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**PART III.**

 

**ITEM 10 — *DIRECTORS, EXECUTIVEOFFICERS AND CORPORATE GOVERNANCE***

 

**Directors of the Registrant**

 

The following table setsforth certain information with respect to each person who is a director of Gevity HR, Inc.(“Gevity” or the “Company”):

** **
| **Name**              | ** ** | **Age** | ** ** | **Position**                          |
|-----------------------|------------|---------|------------|---------------------------------------|
| Michael J. Lavington  |       | 62      |       | Chairman and Chief Executive  Officer |
| George B. Beitzel     |       | 80      |       | Director                              |
| Todd F. Bourell       |       | 38      |       | Director                              |
| Paul R. Daoust        |       | 61      |       | Director                              |
| Jonathan H. Kagan     |       | 52      |       | Director                              |
| David S. Katz         |       | 43      |       | Director                              |
| James F. Orr III      |       | 66      |       | Director                              |
| Jeffrey A. Sonnenfeld |       | 55      |       | Director                              |
| Daniel J. Sullivan    |       | 62      |       | Director                              |

 

*Michael J.Lavington,*a citizen of the UnitedKingdom, has served as chairman of Gevity since October 2007 and as adirector of Gevity since September 2006. In October 2007, our boardannounced that Mr. Lavington was the board’s choice for appointment as theCompany’s chief executive officer, subject to obtaining all necessaryimmigration approvals.  In September 2008,Mr. Lavington received his work authorization from the United Statesgovernment and became chief executive officer of Gevity.  Since 2003, prior to joining Gevity, Mr. Lavingtonacted as an independent business consultant serving clients in the UnitedKingdom and the United States. From 2000 to 2002, Mr. Lavington served assenior vice president of human resources and property for Global Telesystems, Inc.From 1999 to 2000, Mr. Lavington served as senior consultant with GarnerInternational, an executive recruitment and business consultancy firm. From1991 to 1999, Mr. Lavington worked for the Rank Group, PLC, initiallyas the group human resources director and later as president and chiefexecutive office of their US subsidiary, Resorts USA, Inc. From 1984 to1990, Mr. Lavington was employed by the Mecca Leisure Group, PLC,serving as group services director and later, from 1984 to 1991, as divisionalmanaging director of its overseas division, which included the Hard Rock CaféGroup. In 1985, Mr. Lavington was appointed to the main board of MeccaGroup.

 

*George B.Beitzel*has served as a director of Gevity since November 1993.Mr. Beitzel retired from IBM in 1987, where he had served for32 years, the last 14 as a member of IBM’s board of directors andcorporate officer. Mr. Beitzel currently serves on the board of directorsof Actuate Corporation and Bitstream, Inc. Mr. Beitzel is chairmanemeritus of Amherst College and Colonial Williamsburg Foundation. He is agraduate of Harvard Business School and served 12 years on the board ofdirectors of the Associates at Harvard Business School.

 

*Todd F.Bourell* has served as a director of Gevity since June 2007. Mr. Bourellis a partner at ValueAct Capital, LLC(“ValueAct”), a privately-owned hedgefund, which he joined in May 2001. Prior to joining ValueAct, he wasemployed at Wellington Management Company as an analyst covering the telecommunicationsservices industry. Mr. Bourell also served as director of Insurance AutoAuctions, Inc. from September 2004 to May 2005. He is a graduateof the University of Pennslyvania’s Wharton School of Business and HarvardCollege.

 

*Paul R.Daoust* has served as a director of Gevity since May 2006. Mr. Daoustcurrently serves as non-executive chairman of HighRoads, Inc., aprivately-held technology enabled solutions company in the human resourcesspace, which he joined in February 2005 and served as its chairman andchief executive officer until December 18, 2008.  From October 2000 until his retirementin July 2003, Mr. Daoust served as chairman of the board and chiefexecutive officer of GRX Technologies, Inc., a privately-held softwarecompany focused on supply chain management for the commercial insuranceindustry. Mr. Daoust also served as executive vice president and chiefoperating officer of Watson Wyatt Worldwide, Inc. (“Watson Wyatt”), one ofthe world’s largest human resource consulting firms, from June 1993 to June 1998.He worked for Watson Wyatt for 28 years and served on their board ofdirectors for nine years. He currently serves on the board of Salary.com, apublicly-held technology company in the human resources space, and on the advisoryboards of Brodeur Worldwide (part of the Omnicom Group) and LaborMetrix, Inc.

 

*JonathanH. Kagan* has served as a director of Gevity since May 1999.  Mr. Kagan is a managing principal atCorporate Partners, LLC.  He previouslyserved as managing principal at Lazard Alternative Investments from 2001 to2009. From 1995 to 2000, Mr. Kagan served as managing director of CentrePartners Management, LLC, managing 

 

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investments on behalf of Centre CapitalInvestors II, LP and affiliated entities. From 1990 to 2000, Mr. Kaganwas a managing director of Corporate Advisers, LP.  From 1987 to 2000, he was a managing directorof Lazard Freres & Co., LLC.

 

*David S.Katz* has served as a director of Gevity since June 2003. Since February 2006,Mr. Katz has been a principal of GTCR Golder Rauner, LLC, aChicago-based private equity investment firm. From April 2000 to January 2006,he served as a managing director of Frontenac Company, LLC (“Frontenac”),a private equity investment firm. Mr. Katz currently serves on the boardof directors of APS Healthcare, Inc. and Capella Healthcare, Inc.,and has previously served on the board of directors of Natural Nutrition Group, Inc.,Pro Mach, Inc. and numerous other privately-held companies. Mr. Katzjoined Frontenac in 1994 after holding positions at The Clipper Group and TheBoston Consulting Group.

 

*James F. Orr III* has served as a director of Gevity sinceMay 2008. Mr. Orrhas been the chairman of the board of trustees of the RockefellerFoundation since 2000.  Mr. Orr has also served as a director ofAmerican International Group, Inc. since 2006, where he also serves as amember of the compensation and management resources, and the nominating andcorporate governance committees.  He hasalso been a director of UNUM Corporation since 1986; a director of MellonFinancial Corporation since 2003; a director of Nashua Corporation since 1989 anda director of The Stride Rite Corporation since 2003.

 

*Jeffrey A.Sonnenfeld* has served as a director of Gevity since May 2004.Dr. Sonnenfeld is currently the senior associate dean for executiveprograms and a professor at the Yale School of Management. In addition, he isthe president and chief executive officer of the Chief Executive LeadershipInstitute which he founded in 1998 and which was acquired by Yale University in2001. From 1989 to 1997, Dr. Sonnenfeld was a professor at the GoizuetaBusiness School of Emory University. From 1980 to 1987, he was a professor atthe Harvard Business School. Dr. Sonnenfeld currently serves on the boardof directors of TheStreet.com, Inc. and Lennar Corporation.

 

*Daniel J.Sullivan* has served as a director of Gevity since May 2007.Mr. Sullivan began his career as an operations supervisor for RoadwayExpress. In 1983, he joined Roadway Services where he founded Roadway PackageSystem (“RPS”), serving as RPS’s president and chief executive officer until1990. Mr. Sullivan became vice president and group executive for RoadwayServices in 1990, senior vice president and president of the National CarrierGroup in 1993, president and chief operating officer in 1994, and chairman,president and chief executive officer in 1995. Mr. Sullivan served on theboard of directors of Roadway Services from 1990 to 1996. In 1996, Mr. Sullivanled the transformation of Roadway Services to Caliber System, Inc. Heserved as chairman, president, and chief executive officer of Caliber until1998. In 1998, Caliber System was acquired by FedEx Corporation. Mr. Sullivanreturned to FedEx Ground (formerly RPS) and served as president and chiefexecutive officer until his retirement on December 31, 2006. Mr. Sullivanis a member of the boards of directors of Computer Task Group, Inc.(Buffalo, NY), GDS Express, Inc. (Akron, OH), and Pike Electric, Inc.(Mount Airy, NC) and serves as a commissioner on the Flight 93National Memorial Federal Advisory Commission.

 

**Corporate Governance**

 

Gevity’s system ofgovernance is allocated between our shareholders, our board of directors andour employee management team.  Ourshareholders elect our board, which acts as the Company’s governing body, andmanagement runs the Company’s day-to-day operations.

 

Gevity operates within acomprehensive corporate governance framework, which includes definingindependence, assigning responsibilities, setting exceptional standards ofprofessional and personal conduct and assuring compliance with suchresponsibilities and standards. Our board, and especially ournominating/corporate governance committee, regularly monitors developments inthe area of corporate governance, including the rules and regulationsadopted pursuant to the Sarbanes-Oxley Act of 2002, as well as corporategovernance standards and disclosure requirements imposed or recommended byNASDAQ Marketplace Rules (“NASDAQ”) and the SEC.

 

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**Guidelines**

 

Our board adopted Guidelineson Significant Corporate Governance Issues, which is available in the “AboutGevity - Corporate Governance” section of our website,*gevity.com*. Among other matters, theguidelines include the following corporate governance standards:

 

·                  There should be a substantial majority ofindependent directors on our board.

·                  Independent directors should meet on aregular basis apart from other board members and management representatives.

·                  All directors should stand for election everyyear (rather than having a so-called “staggered board”).

·                  Board compensation should be a mix of cashand equity-based compensation. Management directors will not be paid for boardmembership in addition to their regular employee compensation. Independentdirectors may not receive consulting, advisory or other compensatory fees fromGevity in addition to their compensation as directors. To the extentpracticable, independent directors, if any, who are affiliated with our serviceproviders will undertake to ensure that their compensation from such providersdoes not include amounts connected to payments by Gevity.

·                  Board members must act at all times inaccordance with the requirements of our Code of Business Conduct and Ethics, whichare applicable to each director in connection with his or her activitiesrelating to Gevity.

·                  Our board establishes committees and appointsthe members of such committees.

·                  The audit, compensation andnominating/corporate governance committees should consist entirely ofindependent directors.

·                  The annual cycle of agenda items for boardmeetings is expected to change on a periodic basis to reflect board requestsand changing business and legal issues. Our board will have regularly scheduledpresentations from the heads of significant functional areas within theCompany. Our board’s annual agenda will include, among other items, thelong-term strategic plan for the Company, capital projects, budget matters andmanagement succession.

·                  Our board may contact and meet with anyGevity employee at any time.

·                  The chief executive officer should report atleast annually to our board on succession planning and management development.

·                  At least annually, our board should evaluatethe performance of the chief executive officer and other senior managementpersonnel.

·                  Our board and each board committee shouldconduct periodic self-evaluations and self-assessments of itself and itsmembers.

·                  Our boardshould work with management to schedule new-director orientation programs andcontinuing education programs for directors. The orientation programs aredesigned to familiarize new directors with Gevity’s businesses, strategies andchallenges, and to assist new directors in developing and maintaining theskills necessary or appropriate for the performance of their responsibilities.Continuing education programs for board members may include a mix of in-houseand third-party presentations and programs.

·                  Non-employeedirectors and our executive officers are encouraged to be Gevity shareholders,which beneficial ownership is intended to fully align the interests of Gevity’sdirectors and executive officers with the interests of its shareholders,further promote the Company’s commitment to sound corporate governance, andsignify leadership’s confidence in the Company. These guidelines encouragecovered individuals to achieve certain goals concerning the ownership of theCompany’s common stock within five years after becoming subject to theguidelines. Non-employee directors are encouraged to own shares of our commonstock having a value of not less than five times the amount of the annual feepaid to them for serving as a board member. With respect to our executives, ourchief executive officer is encouraged to own shares of our common stock havinga value of not less than five times his annual base salary, our executiveofficers with line responsibility are encouraged to own shares of our commonstock having a value of not less than two times their annual base salary andour executive officers with staff responsibilities are encouraged to own sharesof our common stock having a value not less than their annual base salaries.

·                  With limitedexceptions, directors and officers may not invest in (purchase or otherwisereceive or write) derivatives of Gevity securities, e.g., puts and callson Gevity securities, or enter into any “short sales” or “short positions” withrespect to Gevity securities. A short position is one in which the holder willprofit if the market price of the securities decreases. Gevity considers itinappropriate and contrary to the interests of Gevity and its shareholders fordirectors and officers to take such investment positions.

 

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**Code of Business Conduct and Ethics**

 

Our board of directorsadopted a Code of Business Conduct and Ethics, which applies to all of ourdirectors, officers and employees with regard to their company-relatedactivities. This code includes Gevity’s policies with respect to conflicts ofinterest, confidentiality, protection of Gevity’s assets, ethical conduct inbusiness dealings, and respect for and compliance with, applicable law. Thecode includes, within it, standards applicable to all employees, including ourchief executive officer, chief financial officer, chief sales and marketingofficer, chief information officer, chief legal officer, corporate controllerand persons performing similar functions, with respect to ethical standardsinvolving disclosures in reports that we file with the SEC and in other publiccommunications. Any waiver of the requirements of our code with respect to anyindividual director or executive officer is required to be reported to, andsubject to the approval of, our board of directors. Since its inception, nowaivers to our code have been requested or made. Concerns about accounting orauditing matters, or possible violations of Gevity’s Code of Business Conductand Ethics, should be reported pursuant to the procedures outlined in the code,which is available in the “About Gevity - Corporate Governance” section of ourwebsite, *gevity.com*.

 

**Board Responsibilities and Structure**

 

The primary responsibilitiesof our board are oversight of, and counseling and direction to, our managementin the long-term interests of the Company and our shareholders. Our board’sresponsibilities include:

 

·                  selecting andregularly evaluating the performance of the chief executive officer and otherexecutive officers;

·                  planning forsuccession with respect to the position of chief executive officer andmonitoring management’s succession planning for other executive officers;

·                  reviewing and,when appropriate, approving our major financial objectives and strategic andoperating plans and actions;

·                  overseeing theconduct of our business to evaluate whether the business, in the judgment ofour board, is being properly managed; and

·                  overseeing theprocesses for maintaining our integrity with regard to our financial statementsand other public disclosures as well as compliance with law and ethicalbusiness practices.

 

Our board instructed ourchief executive officer to work with our other executive officers to manage ourbusiness in a manner consistent with our standards and practices, in accordancewith all applicable legal requirements and our published Code of BusinessConduct and Ethics and in compliance with any specific plans, instructions ordirections of our board. Our management is responsible for seeking the adviceand, in appropriate situations, the approval of our board with respect toextraordinary actions to be undertaken by the Company.

 

**Board Committees and Charters**

 

Our board has delegatedvarious responsibilities and certain authority to its established boardcommittees. The established committees of our board are the audit,compensation, nominating/corporate governance, and executive committees. Thesecommittees regularly report on their activities and actions to the full board.Each year our board appoints the members of its committees. The board and itscommittees meet throughout the year on a set schedule, and also hold specialmeetings and act by written consent from time to time, as appropriate. Boardmeeting agendas include regularly-scheduled sessions for the independentdirectors to meet in the executive session without management ornon-independent directors present.

 

A copy of the currentcommittee charter for each committee, as well as a copy of our Guidelines onSignificant Corporate Governance Issues, are posted in the “About Gevity -Corporate Governance” section of our website, *gevity.com*.

 

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As of the date hereof, themembers of our board committees are as follows:

 

| **Director**          | ** ** | **Audit** | ** ** | **Compensation** | ** ** | **Nominating/  Corporate  Governance** | ** ** | **Executive** | ** ** |
|-----------------------|------------|-----------|------------|------------------|------------|----------------------------------------|------------|---------------|------------|
| Michael J. Lavington  |       | —    |       | —           |       | —                                 |       | Chair         |       |
| George B. Beitzel     |       | Chair     |       | —           |       | —                                 |       | X             |       |
| Todd F. Bourell       |       | —    |       | X                |       | —                                 |       | —        |       |
| Paul R. Daoust        |       | —    |       | —           |       | —                                 |       | —        |       |
| Jonathan H. Kagan     |       | X         |       | —           |       | Chair                                  |       | X             |       |
| David S. Katz         |       | —    |       | X                |       | —                                 |       | —        |       |
| James F. Orr III      |       | —    |       | —           |       | X                                      |       | —        |       |
| Jeffrey A. Sonnenfeld |       | —    |       | —           |       | X                                      |       | —        |       |
| Daniel J. Sullivan    |       | X         |       | Chair            |       | X                                      |       | X             |       |

 

Audit Committee

 

The audit committee assistsour board in fulfilling its responsibilities by overseeing Gevity’s accountingand financial reporting processes, the audit of our consolidated financialstatements, the qualifications of the independent registered public accountingfirm engaged as our independent auditor, and the performance of the internalauditors and independent auditors. The audit committee is solely responsiblefor the appointment, dismissal, compensation and oversight of the work ofGevity’s auditors. In addition, the audit committee generally approves anyrelated party transactions, oversees our internal compliance programs and isresponsible for establishing procedures for the receipt, retention andtreatment of complaints received by Gevity regarding accounting, internalaccounting controls or auditing matters, including the confidential, anonymoussubmission from our employees, received through established procedures, ofconcerns regarding questionable accounting or auditing matters. The audit committeerelies on the expertise and knowledge of management, the internal auditors, andour independent auditor in carrying out its oversight responsibilities.

 

Our board has determinedthat each audit committee member has sufficient knowledge in financial andauditing matters to serve on the audit committee and is financially literate asrequired by NASDAQ. In addition, our board determined that Mr. Kagan is an“audit committee financial expert” as defined under the Securities Exchange Actof 1934, as amended (the “Exchange Act”). Shareholders should understand thatthis designation is a disclosure requirement under the Exchange Act related to Mr. Kagan’sexperience and understanding with respect to certain accounting and auditingmatters. The designation does not impose upon Mr. Kagan any duties,obligations or liabilities that are greater than are generally imposed on himas a member of the audit committee and our board, and his designation as an “auditcommittee financial expert” pursuant to this requirement does not affect theduties, obligations or liabilities of any other member of the audit committeeor our board.

 

CompensationCommittee

 

  The compensation committee determines thecompensation of our executive officers, including our chief executive officer,chief financial officer, chief sales and marketing officer, chief informationofficer, chief legal officer and senior vice presidents.  The compensation committee also establishesthe parameters for the compensation of our other officers holding the title ofvice president. The committee also reviews and reassesses annually thecompensation paid to members of our board for their service on our board andboard committees and recommends any changes in compensation to the full boardfor its approval. In addition, the compensation committee authorizes all stockoption and other equity-based awards to employees and non-employee directorsunder our stock option and equity incentive plans. For information about ourcompensation program, the role of the compensation committee and the engagementof compensation consultants in setting executive compensation, see “CompensationDiscussion and Analysis.”

 

Nominating/CorporateGovernance Committee

 

The nominating/corporate governance committeeis responsible for:

 

·                  determining theslate of director nominees for election to our board;

·                  recommendingcandidates for election to our board between annual shareholder meetings;

·                  reviewing thesize and composition of our board and its committees;

·                  establishingprocedures for the director nomination process;

 

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·                  monitoringcompliance with, and reviewing and recommending changes to, our Guidelines onSignificant Corporate Governance Issues; and

·                  reviewingGevity’s policies and programs that relate to matters of corporateresponsibility.

 

The nominating/corporategovernance committee is responsible for regularly reviewing with our board theappropriate skills and characteristics required of board members in the contextof the current size and make-up of our board in light of Company objectives.This assessment includes issues of diversity and numerous other factors, suchas professional or business experience and qualifications. These factors, andany other qualifications considered relevant by the nominating/corporategovernance committee, are reviewed in the context of an assessment of theperceived needs of our board at that time. As a result, the priorities andemphasis of the nominating/corporate governance committee and of our board maychange from time to time to take into account changes in business and othertrends and the portfolio of skills and experience of current and prospectiveboard members. Therefore, while focused on the achievements and the perceivedability of potential candidates to make a positive contribution with respect tosuch factors, the nominating/corporate governance committee has not establishedany specific minimum criteria or qualifications that a nominee must possess.

 

The nominating/corporategovernance committee will consider candidates proposed by shareholders,provided such nominations comply with the applicable provisions of our bylawsand the procedures to be followed in submitting proposals. Thenominating/corporate governance committee evaluates candidate nominees proposedby shareholders using the same criteria as for other candidates. A shareholderseeking to recommend a prospective nominee for the nominating/corporategovernance committee’s consideration should submit the candidate’s name andqualifications by one of the following means:

 
| Mail:  | Gevity HR, Inc. 

9000 Town Center Parkway 

Bradenton, FL 34202 

Attn: Edwin E. Hightower, Jr., Corporate Secretary |
|--------|---------------------------------------------------------------------------------------------------------------------------------|
| Email: | *corporate.secretary@gevity.com*                                                                                                |
| Fax:   | (941) 744-3322                                                                                                             |

 

ExecutiveCommittee

 

The executive committee mayexercise all power and authority of our board of directors when action isrequired to be taken between regular meetings of our board and where time is ofthe essence and it is not practicable to convene a special meeting of ourboard. The executive committee may exercise these powers to the fullest extentpermitted under our articles of incorporation, bylaws and Florida law.

 

**Communications from Shareholders to the Board**

 

Shareholders may contact anindividual director, a committee of our board, the independent directors as agroup, or our board as a group. All shareholder communications should be sentto the attention of our corporate secretary. This centralized process willassist our board in reviewing and responding to shareholder communications inan appropriate manner. The name of any specific intended board recipient (orrecipients) should be noted in the communication. Communications may be sent byone of the following means:

 
| Mail:  | Gevity HR, Inc. 

9000 Town Center Parkway 

Bradenton, FL 34202 

Attn: Edwin E. Hightower, Jr., Corporate Secretary |
|--------|---------------------------------------------------------------------------------------------------------------------------------|
| Email: | *corporate.secretary@gevity.com*                                                                                                |
| Fax:   | (941) 744-3322                                                                                                             |

 

Our board has instructed ourcorporate secretary to forward such correspondence only to the intendedrecipients. Prior to forwarding any correspondence, however, the corporatesecretary will review such correspondence and, in his discretion, will notforward certain items to a director if the communication is deemed to be of acommercial or frivolous nature or otherwise inappropriate for our board’sconsideration. In such cases, some of that correspondence may be forwardedelsewhere in our Company for review and possible response. The foregoingprocess has been approved by a majority of our independent directors.

 

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Concerns about accounting orauditing matters or possible violations of Gevity’s Code of Business Conductand Ethics should be reported pursuant to the procedures outlined in the code,which is available in the “About Gevity - Corporate Governance” section of ourwebsite, *gevity.com*.

 

**Section 16(a) Beneficial Ownership ReportingCompliance**

 

Section 16(a) ofthe Exchange Act requires our executive officers, directors and all persons whobeneficially own more than 10% of the outstanding shares of our common stock (“ReportingPersons”) to file reports of ownership and changes in ownership with the SEC.Reporting Persons are required to furnish us with copies of all reports theyfile. As a matter of practice, our administrative staff assists our executiveofficers and directors in preparing and filing such reports with the SEC.

 

To our knowledge, basedsolely upon a review of copies of reports filed by the Reporting Persons withthe SEC for the year ended December 31, 2008, and representations providedto us by the Reporting Persons, no Reporting Person failed to file the formsrequired by Section 16(a) of the Exchange Act on a timely basis,except due to an administrative error, the Form 3 for Edwin E. Hightower,Jr., filed on July 1, 2008, erroneously reported 1,879 shares beneficiallyowned, rather than the actual 1,336 shares beneficially owned by him; and on April 7,2009, the Form 4 for Mr. Hightower was filed to reflect thedisposition of 191 shares for tax withholding purposes on January 15,2009.  In addition, in reconcilingholding records for George B. Beitzel and his wife, it was determined thatone sale and two gift transactions by Mr. Beitzel were not timely reportedin 2005 and 2006; a Form 4 was filed on March 18, 2009 for Mr. Beitzelto accurately reflect his current holdings.

 

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**ITEM 11 — *EXECUTIVE COMPENSATION***

 

**Compensation Discussion and Analysis**

 

Compensation Program Objectives and Rewards

 

The primary objective of ourcompensation program, and the guiding philosophy of our compensation committeein designing such program, is to provide a compensation package that attractsand retains talented employees, including our named executive officers. Ourprogram is designed to reward superior performance and hold consequences forunderperformance - our “pay for performance” philosophy. A further objective isto ensure the compensation program is aligned with our shareholders’ short- andlong-term interests and, in this regard, encourages our named executiveofficers to act as equity owners. Finally, our compensation program is designedwithin our cultural framework and ethical standards:

 

*CompanyCulture.*  We seek tomaintain an egalitarian culture in our facilities and operations. Neither ournamed executive officers nor our other officers are entitled to operate underdifferent standards than those applicable to our other internal employees. Wedo not provide our named executive officers with reserved parking spaces orseparate dining or other facilities, for example, and we have implemented veryfew programs that provide for personal benefits or perquisites to our namedexecutive officers. As a provider of human resource consulting services, webelieve this type of culture inspires trust at all levels and removes any senseof entitlement merely because of someone’s “level” or title.

 

*EthicalStandards.*  Quitesimply, “Integrity Works Here” at Gevity. We expect our directors and namedexecutive officers to be role models under our Code of Business Conduct andEthics, which is applicable to all board members and internal employees. Allinternal employees, including named executive officers, are required tocomplete an ethics course upon the start of employment, and we hold periodicethics-oriented training at all levels.

 

Named Executive Officers for2008

 

After the resignation of ourformer chief executive officer, Erik Vonk, in October 2007, our boardappointed Mr. Lavington as chairman of the board and chief executiveofficer designate (“CEO designate”) and announced that Mr. Lavington wasour board’s choice for appointment as chief executive officer (“CEO”), subjectto his obtaining all necessary immigration approvals.  In September 2008, Mr. Lavingtonreceived the necessary immigration approvals and entered into an employmentagreement with the Company to become our CEO.

 

Besides Mr. Lavington,our other active named executive officers include:  Garry J. Welsh, our senior vice president andchief financial officer; James E. Hardee, our senior vice president and chiefsales and marketing officer; Paul E. Benz, our senior vice president and chiefinformation officer; and Edwin E. Hightower, Jr., our senior vicepresident and chief legal officer.

 

Over the course of 2008, oneof our named executive officers, Clifford M. Sladnick, former chiefadministrative officer, resigned. Mr. Sladnick appears in the compensationtables included in this Form 10-K/A and payments made to him in connectionwith his employment termination are described in a section titled, “CompensationPaid to Named Executive Officer Who Departed in 2008.”

 

PotentialTriNet Merger and its Impact on Equity Compensation Arrangements

 

On March 4, 2009,Gevity, TriNet Group, Inc. (“TriNet”) and Gin Acquisition, Inc., awholly owned subsidiary of TriNet (“Merger Sub”) entered into a MergerAgreement (the “Merger Agreement”). Under the Merger Agreement, Merger Sub will be merged with and intoGevity (the “Merger”) with Gevity surviving the Merger as a wholly-ownedsubsidiary of TriNet.  Pursuant to theMerger Agreement, at the effective time of the Merger, each share of commonstock of Gevity issued and outstanding immediately prior to the effective time(other than common shares held by (i) us as Treasury stock; (ii) TriNetor Merger Sub or any of their direct or indirect subsidiaries; and (iii) anyof our direct or indirect wholly owned subsidiaries) will be automaticallyconverted into the right to receive $4.00 in cash without interest and lessapplicable withholding taxes.  Inaddition, at the effective time of the Merger, all outstanding options topurchase shares of common stock of Gevity will be cancelled and will beconverted into the right to receive a cash payment equal to the excess, if any,of $4.00 per share in cash over the exercise price per share of the option,multiplied by the number of shares subject to the applicable options, whetheror not then exercisable, without interest and less any applicable withholding tax.  If the exercise price per share of any optionis $4.00 or greater, the holder thereof will not receive any cash payment when 

 

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the option is cancelled.  Allshares of Gevity’s restricted common stock (other than performance basedrestricted common stock) will be converted into the right to receive $4.00 pershare in cash, in each case without interest and less any applicablewithholding tax.  All shares ofrestricted common stock subject to performance based vesting conditions will becancelled and the holders of such stock will have no right to receive anyconsideration for such cancellation.

 

The Merger Agreement restrictsus from making any further equity grants and we do not intend to make anyadditional equity grants prior to the consummation of the Merger.  If the Merger is consummated, the transactionwill be a “change in control” for purposes of our equity plans and awardagreements and the vesting of certain outstanding equity awards willaccelerate, as described in the section “Change in Control/Severance PaymentsAssuming Completion of Merger.”

 

Compensation Committee Procedures

 

The compensation committeeof our board (“the Committee”) is empowered under the terms of its charter toreview and determine the compensation of our CEO and our other named executiveofficers. The Committee is also responsible for:

 

·                  approvingcorporate goals and objectives relating to compensation of our executiveofficers;

·                  performingannual reviews of our executive officers, including evaluating theirperformance against the goals and objectives established;

·                  settingcompensation levels or ranges for our executive officers; and

·                  overseeing ourcompensation plans and policies and administering our equity incentive plans.

 

On an annual basis, theCommittee reviews and reassesses the compensation paid to members of our boardfor their service on our board and board committee(s), and recommends anychanges to the full board for its approval.

 

Compensation Consultant

 

The Committee engaged Mercer(US), Inc. (“Mercer”) as its compensation consultant to provide research,market data, survey information and design expertise in developing compensationprograms, including equity programs. At the request of management or theCommittee, Mercer attended a number of Committee meetings and performed workbased on Committee directives. Mercer provided its recommendations and did notdetermine the exact amount or form of compensation for any of the namedexecutive officers.  The Committee madeall final compensation determinations.

 

Compensation Benchmarking

 

As in past years, theCommittee utilized the services of Mercer to assist in the design of ourexecutive compensation program, and in setting the groundwork for executivecompensation in future years. In accordance with the recommendations of Mercer,the Committee uses an industry-related peer group for annual external pay andperformance validation. The Committee’s philosophy is to establish compensationopportunities for our named executive officers that are commensurate with oursize and our short- and long-term performance goals.

 

The targeted totalcompensation opportunity - comprised of base salary, plus short-term incentiveat target and long-term incentive at target - for our named executive officersas established by the Committee is generally at or below the median of theindustry-related peer group for each pay element and in total.  For 2008:

 

·                  Together withMercer, the Committee looked at a compensation peer group of 11 publicly-tradedcompanies based on relevant industry/business and size range. These consistedof: Administaff, Inc.; Automatic Data Processing, Inc.; CBIZ, Inc.;Ceridian Corp.; Convergys Corporation; Hewitt Associates, Inc.; Korn FerryInternational; Navigant Consulting, Inc.; Paychex, Inc.; SpherionCorp.; and Watson Wyatt & Co. Holdings. Peer group members arethe same as the prior year.  CeridianCorp. was removed as a peer group member in May 2008, following thecompletion of the joint acquisition of Ceridian Corp. by Thomas H. LeePartners, LP and Fidelity Financial Services, Inc.

·                  Mercer providedthe Committee with data to assist in the review and comparison of eachcompensation element for our named executive officers. With this information,the Committee reviewed and analyzed compensation for each of our namedexecutive officers and made adjustments as it may have deemed appropriate. TheCommittee also requested and considered the recommendations of our CEO withrespect to named executive officer compensation, as more fully detailed below.

 

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The Role of our CEO in Setting Executive Compensation

 

Because of our CEO’s leadership role in managing our named executiveofficers, the Committee believes it is important for the CEO to have a role insetting the annual incentive plan design and performance goals for our namedexecutive officers and determining their rewards for the prior year’sperformance. The Committee’s charter formalizes this role. The CEO is invitedto present his recommendations to the Committee at the meeting where thesematters are considered, which typically occurs in February or March ofeach year. The CEO generally provides an overview of the business from hisvantage point, including a review of the individual contributions of each othernamed executive officer of our business. The CEO also provides input withrespect to the earned rewards for the other named executive officers, which heprovides in the context of our prior year performance and our plans for thecoming year. The CEO then participates in the Committee’s discussions of hisrecommendations with respect to the other named executive officers. We believethat the discussions between the CEO and the Committee are an important pieceof the evaluative process in which the Committee engages.

 

Mr. Lavington participated in these meetings and provided hisrecommendations, including meetings in which the 2008 annual incentive awardsand the 2009 annual incentive plan design was determined with respect to thenamed executive officers (other than Mr. Lavington). Mr. Lavington,however, does not and did not participate in the Committee’s discussions inwhich they consider and set his compensation. No other named executive officerparticipates in the compensation decision-making process.

 

In light of Mr. Lavington’sgreater oversight role with the Company during the first nine months of 2008,prior to his employment with the Company as CEO, at the request, and on behalf,of our board, the Company paid Mr. Lavington additional board fees.  For a discussion of the additional oversightroles Mr. Lavington performed on behalf of our board and the fees hereceived, see “Mr. Lavington’s 2008 Compensation and Additional Board Fees”in the discussion of directors’ compensation below.

 

What Our Compensation Programis Designed to Reward

 

Quite simply,our compensation program is designed to attract and retain highly qualifiedindividuals at all levels in our business and properly incentivize them to enhanceshareholder value, as further described below. It is designed to reward ourexecutives for superior performance and hold consequences for underperformanceto ensure accountability for results and returns to our shareholders.

 

Pay Elements

 

Our compensationpractices reflect the Committee’s pay for performance philosophy, whereby asignificant portion of executive compensation is at risk and tied to bothCompany and business unit or function performance. Our compensation programconsists of several elements, which are described below:

 
| **Pay Element**                                 | ** ** | **Purpose of  the Pay Element and What it Rewards**                                                                                                                                                                                                   |
|-------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Base Salary                                     |       | Provides fixed compensation that is in line  with our philosophy on competitive and market practices. Intended to reward  core competence in the executive’s role relative to skills, experience and  contributions to our business.             |
| Annual Cash Incentives (Short Term  Incentives) |       | Provides at-risk variable pay opportunity.  Intended to reward achievement of specific annual Company and business unit  or functional objectives, typically weighted at two-thirds and one-third,  respectively.                                     |
| Long-term Incentives                            |       | Provides at-risk variable pay opportunity  tied to long-term objectives and stock price appreciation that are aligned  with shareholder interests. Intended to reward both performance and encourage  executives to stay on and act as equity owners. |
| Perquisites                                     |       | Designed to assist the senior executive to  efficiently perform their responsibilities and minimize distractions.                                                                                                                                     |

 

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| **Pay Element**                 | ** ** | **Purpose of  the Pay Element and What it Rewards**                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|---------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Retirement Benefits             |       | Part of our broad-based total rewards  program. Designed to provide employees with a savings vehicle on a tax  deferred basis.                                                                                                                                                                                                                                                                                                                                                              |
| Health and Welfare Benefits     |       | Designed to support employees and their  eligible dependents with ready access to health care so that we can maintain  a healthy and productive workforce, where we supplement premium  contributions. Also provides certain protection against financial  catastrophes that can result from illness, disability or death.                                                                                                                                                                       |
| Severance and Change in Control |       | Includes general and change in control  severance agreements. General severance agreements provide severance in the  case of termination for other than “cause.” Change in control agreements  provide for severance in the event of termination within two years after a  qualifying change in control event. Designed to attract and retain talent,  reflect general market practice and, in the case of the change in control  agreements, to provide for continuity of management. |

 

*Base Salary*

 

We seek toattract and retain qualified executive officers, and we feel it is important tooffer a competitive base salary to achieve this goal. We typically benchmarknew executive officers against equivalent executive officers in our peer groupto set initial base salary levels. Annually thereafter the Committee utilizesMercer to provide benchmark reviews. Base salary reviews are conducted one timeeach year, typically in February or March. In its review, the Committeegenerally considers the CEO’s recommendations, general contribution at theindividual level, peer group data, and the executive officers’ competencies andskill level, in addition to their individual performance.  The base salaries were between 21% and 38% oftotal target pay opportunity, with Mr. Lavington’s base salary atapproximately 21% and the remaining named executive officers’ at 30% to38%.  The actions taken by the Committeewith respect to our named executive officers relating to base salary for 2008are outlined in the table below.

 
| **Named Executive Officer**  | ** ** | **2007 Base Salary ($)** | ** ** | **2008 Base Salary ($)** | ** ** | **% Change** | ** ** |
|------------------------------|------------|--------------------------|------------|--------------------------|------------|--------------|------------|
| Michael J. Lavington         |       | N/A                      |       |                     | 710,000    |         |       | — |   |   |
| Garry J. Welsh               |       | 450,000                  |       |                     | 468,000    |         |       | 4.0 |   |   |
| James E. Hardee              |       | 385,000                  |       |                     | 400,000    |         |       | 3.9 |   |   |
| Paul E. Benz                 |       | 325,000                  |       |                     | 360,000    |         |       | 10.8 |   |   |
| Edwin E. Hightower, Jr. |       | 216,000                  |       |                     | 300,000    |         |       | 38.9 |   |   |
| Clifford M. Sladnick         |       | 360,000                  |       |                     | 360,000    |         |       | 0 |   |   |

 

Generally, theadjustment to the named executive officers’ base salaries for 2008 was a resultof the process described above, and for Mr. Benz, it was also a result ofinternal pay considerations.  Mr. Hightower’sbase salary reflects his promotion in July 2008 from his role as vicepresident to senior vice president, chief legal officer.  Mr. Sladnick’s base salary was notadjusted because of his resignation.

 

*2009 BaseSalary*

 

The Committeedetermined that the 2009 base pay for each named executive officer would remainunchanged from 2008 base pay levels. This was due to a combination of factors, including the Committee’s goalof ensuring consistency with peer group base pay levels and a reflection of thefinancial results of the Company as impacted by general economicconditions.  The named executive officers’base salaries for 2009 are between 21% and 38% of total target pay opportunity.

 

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*Annual Cash Incentives*

 

We believethat our named executive officers should be eligible to receive annual cashrewards linked to achievement of specific short-term goals, both as a companyand within the executive’s individual business unit or function. We establishan operating plan each year that outlines our short-term (annual) goals,consisting of both financial goals and individual business unit or functiongoals. As such, our annual incentive plan includes an opportunity to earn acash reward each year based on a mix of both corporate financial and individualbusiness unit or function performance goals; however, the CEO’s annual cashincentive was solely based on Company performance objectives.  Each metric has levels of performance resultsthat correspond with an earned award level increasing incrementally, startingat 50% of target for threshold performance, to 100% at target performance, andup to 150% of target at superior performance.

 

For 2008, asubstantial portion of each named executive officer’s total target payopportunity - from approximately 24% to 27% - consisted of the annual incentiveelement, in line with emphasis on performance based pay.

 

*PerformanceTargets*

 

Company Performance Objectives:

 

For 2008, 100%of the annual incentive opportunity for Mr. Lavington and 66.7% of theannual incentive opportunity for Messrs. Hardee, Welsh, Benz, andHightower (after he became a named executive officer) was comprised of Companyperformance objectives of:  (i) earningsper share (“EPS”); and (ii) operating ratio (“OR”), each weighted at 50%as follows:

 
| **Company Performance Objectives**               | ** ** | **Threshold** | ** ** | **Target** | ** ** | **Superior** | ** ** |
|--------------------------------------------------|------------|---------------|------------|------------|------------|--------------|------------|
| EPS                                              |       | $             | 0.17       |       | $          | 0.22         |       | $ | 0.30 |   |
| OR (operating expenses divided by gross  profit) |       | 99.8%         |       | 97.8%      |       | 91.8%        |       |
|                                                  |            |               |            |            |            |              |            |  |  |  |

 

Individual Performance Objectives:

 

For each of our named executive officers, except for Mr. Lavington,33.3% of the annual incentive opportunity also consisted of individualperformance objectives, specific to their respective business unit orfunction.  However, the named executiveofficer must first meet, at a minimum, at least one of the Company financialperformance goals at threshold, to be eligible to receive their respectiveindividual performance based incentive opportunity.

 

The Committee solicited feedback from Mr. Lavington relative tothe performance of each named executive officer with respect to theirindividual performance objectives for 2008, and based on such feedback, andafter appropriate consideration determined as follows:

 

·                  For Mr. Welsh,the individual performance objectives were based on obtaining competitive ratesand renewal terms for the Company’s health and welfare benefits program, aswell as reorganizing the Company’s finance department to achieve enhancedefficiency and transparency.  Mr. Welshwas determined to have met the health and welfare benefits program goal at “superior,”while achieving his other goal at “target.”

·                  For Mr. Hardee,the performance objectives were based on achieving new client production andcurrent client retention goals, which were determined to each have beenachieved substantially at “target” levels.

·                  For Mr. Benz,the performance objectives were based on the realization of reduced clientterminations for payroll-related issues and certain service centerenhancements, including achieving higher first-call resolutions, which weredetermined to have been met at “target” and “superior” levels, respectively.

·                  For Mr. Hightower,the performance objectives for the performance period (after being appointed asa named executive officer in July, 2008) were based on the successfuldevelopment of a cross-functional information security plan, as well aseffectively evaluating the Company’s employment practices liability insuranceprogram to achieve savings on premium expenses and exposures, both of whichwere met at “target” levels.

 

Mr. Sladnick performance objectives were not evaluated due to hisdeparture in 2008.  Please see “CompensationPaid to Named Executive Officer Who Departed in 2008,” below.

 

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*AnnualIncentive Payouts*

 

The Committeedetermined that the named executive officers met the EPS goal at threshold onan adjusted basis - adjusted by excluding the $8.7 million write-down ofgoodwill from continuing operations.  Inarriving at this decision, the Committee determined that the goodwillimpairment was an extraordinary item appropriate for exclusion in calculatingannual incentive compensation, based, in part, on the overall impact of thegeneral economic conditions that precipitated the goodwill impairment.  The Committee believed the EPS at threshold,as adjusted, was a better and more accurate reflection of the Company’soperating results.  We did not meet our2008 OR threshold, and no portion of the incentive payments was attributable tothis performance element.

 

The Committeemade cash award determinations for the EPS award metric (calculated at “threshold”)as well as for individual performance goal achievement, as outlined above.  The 2008 target and actual annual cashincentives under our plan are as follows:

 
| **Named Executive Officer** | ** ** | **2008 Target as % of  Base Salary (%)** | ** ** | **2008 Target Annual  Cash Incentive ($)** | ** ** | **2008 Actual Annual  Cash Incentive ($)** | ** ** |
|-----------------------------|------------|------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------|------------|
| Michael J. Lavington        |       | 130.0                                    |       |                                       | 923,000    |                                       |       | 230,750 |   |   |
| Garry J. Welsh              |       | 66.7                                     |       |                                       | 312,156    |                                       |       | 181,987 |   |   |
| James E. Hardee             |       | 80.0                                     |       |                                       | 320,000    |                                       |       | 154,965 |   |   |
| Paul E. Benz                |       | 66.7                                     |       |                                       | 240,120    |                                       |       | 129,995 |   |   |
| Edwin E. Hightower (1)      |       | 66.7                                     |       |                                       | 100,050    |                                       |       | 49,999 |   |   |
| Clifford M. Sladnick        |       | 66.7                                     |       |                                       | 240,120    |                                       |       | 60,030 | (2) |   |

 

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(1)                                 Theopportunities and payments shown for Mr. Hightower are for his services asa named executive officer between July 1 and December 31, 2008.

(2)                                 Mr. Sladnickresigned during the course of 2008 and pursuant to his severance agreement withthe Company, he received $60,030; this amount is reflected as All OtherCompensation in the 2008 Summary Compensation Table.  For more information, please see “CompensationPaid to Named Executive Officer Who Departed in 2008,” below.

 

*BonusAwards*

 

In addition tothe annual cash incentive award to Mr. Welsh disclosed above, theCommittee awarded him a $100,000 discretionary bonus on the recommendation ofthe CEO, due to the significant contribution he made to improve the Company’sworking capital, as well as his work as interim CEO from January 1, 2008to September 15, 2008.  Mr. Hightoweralso received $45,000 in his capacity as a vice president for the first sixmonths of 2008, related to his achievement at “target” of the successfultransition of his human resource-related leadership duties to a new vicepresident of human resources as he transitioned to his role as senior vicepresident, chief legal officer.

 

In September 2008,Mr. Lavington received a one-time sign-on bonus of $130,000 related to hisrole as CEO.

 

*Long-Term Incentives*

 

In furtheringour goal of aligning the interests of our named executive officers with thelong-term interests of our shareholders, we provide long-term incentives (“LTI”)in the form of equity awards. We believe this encourages our named executiveofficers to act as equity owners. In other words, we reward continuedprogression in terms of stock performance.

 

*GrantPractices*

 

The Committeegenerally makes regular annual equity grants at the same time it determinesannual incentive awards for the prior year’s service, which typically occurs atits regularly scheduled meeting in February or March. The authority togrant equity awards to employees is reserved to the Committee, and theCommittee does not delegate its authority, except that the Committee hasestablished guidelines for equity grants to newly hired employees at the vicepresident level, granted as an inducement to employment. These guidelines arereviewed by the Committee annually. The Committee does not time the award ofequity grants based on the release of material non-public information.

 

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*2008 Awards*

 

The LTI awardsmade up between approximately 38% to 52% of each named executive officers’ 2008total target pay opportunity, with Mr. Lavington’s at approximately 52%and the remaining named executive officers’ at 38% to 45%, which the Committeebelieved was an appropriate portion of total pay and reflective of peer groupand market practices.

 

While the Company would typically have granted LTI awards to all of thenamed executive officers during the first quarter of 2008 based on each officer’s2007 performance, as well as an evaluation of his potential future contributionto the long-term success of the Company, only Mr. Benz was eligible for a2008 LTI grant for 2007 service; the other named executive officers were noteligible because they either joined the Company during the course of 2007 (Messrs. Welsh and Hardee), were not named executive officers in 2007 (Messrs. Lavingtonand Hightower), or departed during 2008 (Mr. Sladnick).  The Committee awarded Mr. Benz 7,500restricted shares and 25,000 stock options that vest at the rate of 25% peryear beginning on the first anniversary of the date of grant. The exerciseprice of each option is equal to the fair market value of our common stock atthe close of trading on the date of grant, or previous close of trading, if themarket is closed on the date of grant.

 

On May 21, 2008, the Committee determined that an award of aone-time, special LTI award to Messrs. Welsh, Hardee and Benz (the namedexecutive officers serving at the time) that substantially aligns executiveinterests to shareholder value creation was warranted.  Mr. Hightower received his special LTIgrant upon assuming his role as a named executive officer in July 2008.  The award was designed to encourage ourexecutives to act as equity owners and tie the LTI value to our common stockvalue by way of stock price appreciation. The award was intended to provide motivational incentive, while at the sametime, support the retention of key executives critical to the Company’sbusiness strategy.  Each key executivereceived a restricted stock grant of 67,000 shares with a combination oftime-based and performance based vesting requirements.  The awards include the following terms:

 

·                  Approximatelyone-third of the award (21,000 shares) will time vest at a rate of 33.3% peryear (7,000 shares) over a three year period. Vesting will be calculated as of the grant date.

·                  Approximatelytwo-thirds of the award (46,000 shares) will vest based on stock price targetsof $7, $9, $12 and $15 over a four year period. Attainment of stock price targets will be achieved if the price is at orabove the target for five consecutive trading days in December of eachyear, or, ten trading days in December of each year.  At year-end 2008, stock price target of $7was not achieved.

·                  No more than 25%of the performance based vesting component of the award can vest in year one,50% of the award in year two, 75% of the award in year three and 100% of theaward in year four.  If 25% of the awarddoes not vest in any given year, the shares can vest in December of any ofthe following years in which the stock price target is achieved.

·                  All awards shallbe treated in accordance with the Merger Agreement - See section “PotentialTriNet Merger and It’s Impact on Equity Compensation Arrangements” for details.

** **
| **Named Executive Officer**  | ** ** | **Grant Date**    | ** ** | **2008 Long-term  Incentive Award (#)** | ** ** | **2008 Long-term  Incentive Award Value ($)(1)** | ** ** |
|------------------------------|------------|-------------------|------------|-----------------------------------------|------------|--------------------------------------------------|------------|
| Michael J. Lavington         |       | N/A               |       |                                    | N/A        |                                             |       | N/A |   |   |
| Garry J. Welsh               |       | May 22, 2008 |       |                                    | 67,000     |                                             |       | 412,050 |   |   |
| James E. Hardee              |       | May 22, 2008 |       |                                    | 67,000     |                                             |       | 412,050 |   |   |
| Paul E. Benz                 |       | May 22, 2008 |       |                                    | 67,000     |                                             |       | 412,050 |   |   |
| Edwin E. Hightower, Jr. |       | July 1, 2008 |       |                                    | 67,000     |                                             |       | 350,410 |   |   |
| Clifford M. Sladnick         |       | N/A               |       |                                    | N/A        |                                             |       | N/A |   |   |

** **

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(1)                              Reflects fair market value of the award basedon the closing price on the day of grant ($6.15 on May 22, 2008 and $5.23on July 1, 2008)

 

In connection with Mr. Lavington’s employment with the Company asCEO on September 15, 2008, he received 125,000 options, in line with theCommittee’s previous one-time, special LTI grant to the other named executiveofficers.

 

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*Perquisites*

 

Ourexecutives, including our named executive officers, receive enhanced Companycontributions to their health and welfare benefits, as described in the “Healthand Welfare Benefits” section.  No otherperquisites were provided in 2008, other than for Mr. Lavington, whoreceived an annual allowance of $20,000 for supplemental life and disabilityinsurance and automobile expenses.  In2008, Mr. Lavington also received Company paid attorney’s fees related tohis work authorization and immigration application in the amount of $23,820,and gross-up for taxes incurred related to imputed income in the amount of$13,662.

 

*Retirement Benefits*

 

We believe inoffering a vehicle by which all our internal employees, including our namedexecutive officers, can save for retirement on a tax deferred basis both forrecruiting and retention reasons. We sponsor a 401(k) plan with a vestingschedule of one year, in which named executive officers, as well as all otherinternal employees, may participate. We match contributions to the plans at therate of 50% of the first 4% of the elective contributions by all our internalemployees, including the named executive officers. There are no additionalretirement benefits available to named executive officers.

 

*Health and Welfare Benefits*

 

We provide allregular, full time internal employees, including our named executive officers,comprehensive medical coverage that includes both traditional and leading edgeconsumer-driven health plan options—health, dental and vision benefits. Webelieve access to health and welfare benefits provides us with an edge in ourrecruiting and retention efforts. An additional benefit is that ready access tohealth care helps us maintain a healthy and productive workforce.

 

We also offeraccess to supplemental benefits, including short- and long-term disability,accidental death and dismemberment and life insurance. We include, at ourexpense, “core” life insurance to all internal employees who elect toparticipate in our health and welfare plan, with a benefit of one-times salary,up to $100,000.

 

For our namedexecutive officers, as well as for all internal employees holding the title of “director”and “vice president”, we contribute 100% of the employee-only premiums for thelowest cost medical and dental plan available and 90% of the premiums towardfamily coverage for the lowest cost medial and dental plan available. We alsocontribute to all other regular, full time internal employees’ premiums at therate of approximately 90% of the employee-only premiums for the lowest costmedical and dental plan available, and approximately 50% of the premiums towardfamily coverage for the lowest cost medical and dental plan available.

 

*Arrangementswith Executive Officers—General Severance*

 

Although we donot have employment agreements with any of our named executive officers, exceptfor Mr. Lavington, all our named executive officers are eligible toreceive general severance/salary continuation in the event their employment isterminated by us for other than “cause” and provided the named executiveofficer executes a full and complete general release, as agreed to in theiroffers of employment with us. For a further description, see “PotentialPayments Upon Termination or Change in Control,” below.

 

*Change inControl Agreements*

 

We haveentered into change-in-control severance agreements with all five of ourcurrent named executive officers.  Theseagreements provide for severance payments in the event of a termination oftheir employment following a “change-in-control” if such termination is by us “withoutcause” or by the executive for “good reason” (each as defined in theagreements).  Each agreement provides:

 

·                  the term of the agreementautomatically extends until the date that is two years after the change incontrol;

·                  if the executive is terminated “withoutcause” or the executive terminates his employment for “good reason” during theterm of the agreement and within two years following a “change-in-control,” weare required to:

·                  make a lump-sum payment equal to anyunpaid portion of the executive’s base salary, bonus amounts and accruedvacation pay for the period ending on the executive’s termination date, plus

·                  make a lump-sum payment equal toeither the executive’s average annual incentive bonus earned in the threefiscal years prior to the termination or the executive’s target annualincentive bonus for the year in 

 

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which the termination occurs, whichever is greater, which we refer toas the “Bonus Amount,” multiplied by the fraction of the fiscal year completedas of the termination date, but reduced by any annual incentive bonus amountspaid to the executive from the annual incentive plan for the fiscal year inwhich the termination takes place, plus

·                  a lump-sum payment equal to,depending upon the executive, the sum of two times (three times in the case ofour chief executive officer) the amount of his highest annual rate of basesalary during the one-year period prior to the termination plus, depending uponthe executive, two (or three times for our current chief executive officer) hisBonus Amount;

·                  for the continuation of the executive’slife, disability and accident insurance and medical and dental plan coveragefor the number of years after termination of the executive’s employment equalto the multiple of base salary payable to the executive upon a “change-in-control”(or if on the same after tax basis as if such participation has beenpermitted).  In addition, if theexecutive is subject to the excise tax imposed under Section 4999 of the UnitedStates Internal Revenue Code of 1986, as amended, (the “Code”), we will pay anadditional amount so as to put the executive in the same after-tax position heor she would have been in had the excise tax never applied; and

·                  for payment or reimbursement of theexecutive for all reasonable legal fees and expenses, if any, incurred by theexecutive in connection with any contest or dispute under the agreementinvolving termination of the executive’s employment or the failure or refusalof Gevity to perform fully under the agreement.

 

In August 2007,the Company revised its executive agreements to bring the agreements intocompliance with the provisions of Section 409A of the Code by delayingcertain payments until a period that is six months and one day after the dateof termination giving rise to the payment.

 

In addition,all stock incentives that were awarded to the executives under the terms of anyof the Company’s equity incentive plans would fully vest upon the occurrence ofa change in control.

 

For purposesof the executive agreements, a “change in control” means:

 

·                           the acquisition by certainthird parties of 25% or more of the voting power of our company’s outstandingvoting securities;

·                           a majority change in thecomposition of our board of directors;

·                           the consummation of certainmergers or consolidations of our company where the voting securitiesoutstanding immediately prior to such transactions represent 50% or less of thetotal voting power of the corporation resulting from such mergers orconsolidations (or, if applicable, such corporation’s ultimate parent); or

·                           the approval by shareholdersof a plan of liquidation or dissolution of our company or the sale of all orsubstantially all of our company’s assets.

 

“Good Reason,”as defined in the Change in Control Severance Agreements, means any of thefollowing events, without the named executive’s express written consent, postChange in Control:

 

·                        change in duties,responsibilities, titles or offices that is materially or adverselyinconsistent with the executive’s duties or responsibilities immediately priorto Change in Control;

·                        reduction on executive’s rateof annual base salary or annual target bonus opportunity;

·                        required (i) relocation ofbase office of more than 50 miles from where the executive is located at thetime of Change in Control or (ii) substantial increase in business travelobligations;

·                        failure of the Company to (i) continueany employee benefit plan, compensation plan, welfare benefit plan or materialfringe benefit plan to which the executive participated prior to Change inControl, unless a substantially equivalent plan is offered an alternative or (ii) offerpaid vacation in accordance with the most favorable vacation policies of theCompany in effect immediately prior to Change in Control;

·                        any purported termination ofexecutive’s employment not consistent with termination procedures detailedwithin the Change in Control Severance Agreements; or

·                        failure of the Company toobtain an assumption agreement from any successor, as contemplated in theChange in Control Severance Agreement.

 

The executivewill continue to be subject to certain restrictive covenants post employment.

 

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*Employee Stock Purchase Plan(ESPP)*

 

Internal employees whoregularly work more than 20 hours per week and are employed by us for atleast 90 days prior to the offering period are eligible to participate inour shareholder-approved ESPP. Participants, through payroll deduction, maypurchase a maximum of 500 shares during each semi-annual offering period at acost of 85% of the lower of the stock price as of the beginning or ending ofthe offering period, subject to an annual limitation of $25,000.  Our named executive officers are eligible toparticipate in the ESPP; however, no named executive officer participated inthe ESPP during 2008.  Pending the closeof the Merger with TriNet, the Company has suspended all payroll deductionauthorizations for pay dates occurring on or after March 4, 2009 and nonew offering periods will begin under the ESPP after such date.  In connection with the Merger, each option topurchase shares of our common stock shall be automatically exercised and theholder thereof shall have a right to receive $4.00 per share mergerconsideration, without interest less any applicable taxes.

 

*Voluntary Stock OwnershipGuidelines*

 

Our named executive officersare encouraged to be Gevity shareholders, and beneficial ownership of ourshares is intended to fully align the interests of Gevity’s named executiveofficers with the interests of our shareholders, further promote our commitmentto sound corporate governance and signify leadership’s confidence in ourbusiness. These guidelines encourage covered individuals to achieve certaingoals concerning the ownership of our common stock within five years afterbecoming subject to the guidelines. Our CEO is encouraged to own shares of ourcommon stock having a value of not less than five times his annual base salary,our named executive officers with line responsibility are encouraged to ownshares of our common stock having a value of not less than two times theirannual base salary and our named executive officers with staff responsibilitiesare encouraged to own shares of our common stock having a value not less thantheir annual base salaries.

 

Compensation Paid to Named Executive OfficerWho Departed in 2008

 

*SeveranceAgreement with Clifford Sladnick*

 

In connection with Mr. Sladnick’sresignation as our chief administrative officer effective July 31, 2008, Mr. Sladnickand the Company entered into a Separation Agreement and Full and Final Releaseof Claims, dated May 5, 2008 (the “Agreement”).  The Agreement provided for the followingarrangements: (i) continued payment of Mr. Sladnick’s base salary andbenefits through July 31, 2008; (ii) reimbursement before July 31,2008 of $125,000 of travel and accommodation expenses incurred by Mr. Sladnickprior to January 1, 2008; (iii) reimbursement of up to $15,000 oftravel and accommodation expenses incurred by Mr. Sladnick between January 1,2008 and July 31, 2008; (iv) cash payments totaling $360,000, payablein equal installments of $13,846.15 through July 31, 2009; provided,however, that all of the payments otherwise due before February 1, 2009shall be delayed and paid in a single lump sum payment on the first regular paydate after February 1, 2009; (v) medical and dental coverage for Mr. Sladnickand his eligible dependants under the Company insured group health plan, as ineffect from time to time, for the period from July 31, 2008 through January 31,2010, with the Company paying toward Mr. Sladnick and his family’scoverage the same premium the Company pays for active executive officers; (vi) groupterm life insurance, short term disability and long term disability coveragefor Mr. Sladnick for the period from July 31, 2008 through January 31,2010 with the company paying applicable premiums; (vii) subject generallyto the satisfaction of individual and corporate performance, a lump sum cashpayment on March 15, 2009 equal to up to 50% ($120,060) of the cash bonus Mr. Sladnickwould have received under the Company’s short term bonus plan for 2008 if hehad remained employed for the entire period applicable for the bonus; and (viii) theright to exercise any unexercised stock options granted under the optionagreements dated on or about July 11, 2005, February 22, 2006 and April 20,2007 and receive the shares of restricted stock granted on or about July 11,2005, to the extent Mr. Sladnick was vested in such options or shares on July 31,2008, subject, in each case, to all the existing terms, conditions andlimitations applicable to such options and shares.  The Agreement also provided for a full andfinal release by Mr. Sladnick of any and all claims he may have againstthe Company.  The Agreement conditionsthe payment of these amounts on Mr. Sladnick’s compliance with suchrelease and with his Non-Solicitation, Non-Compete and ConfidentialityAgreement with the Company.

 

On May 5, 2008, theCompany and Mr. Sladnick also entered into a Consulting Agreement pursuantto which Mr. Sladnick provided consulting and advisory services to theCompany with respect to certain projects for the period beginning on August 1,2008 and ending on January 31, 2009. Mr. Sladnick performed such services as the Company’s CEOreasonably requested for 16 hours per week. The Company paid Mr. Sladnick $173.00 per hour as compensation forhis services.  In connection with theConsulting Agreement, Mr. Sladnick and the Company entered into aConfidentiality 

 

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and Non-Disclosure, Agreement pursuant to which Mr. Sladnickagreed not to: (i) disclose any of the Company’s confidential informationand trade secrets and (ii) solicit any clients or employees of the Companyduring the engagement as a consultant and for a period of one year after theend of such engagement.

 

Accounting and Tax Considerations

 

Section 162(m) ofthe Code precludes a public corporation from taking a tax deduction for certaincompensation in excess of $1 million in any one year paid to its chiefexecutive officer or any of its three other highest paid executive officers(other than the chief financial officer), unless certain specific and detailedcriteria are satisfied. However, certain qualifying “performance based”compensation (i.e., compensation paid under a plan administered by acommittee of outside directors, based on achieving objective performance goals,the material terms of which were approved by shareholders, such as our GevityHR, Inc. 2005 Executive Incentive Compensation Plan) is not subject to the$1 million deduction limit. The Committee considered the potential impactof Section 162(m) in its review and establishment of compensationprograms and payments. Compensation established by the Committee for 2008 wasdesigned to comply with the requirements of Section 162(m). We have noindividuals with non-performance based compensation paid in excess of Section 162(m) taxdeduction limit of the Code.

 

Our stock option grantpolicies have been impacted by the implementation of Statement of FinancialAccounting Standards No. 123R, *Share-Based Payment*(“FAS 123R”), which we adopted in the first quarter of fiscal year 2006.Under this accounting pronouncement, we are required to value unvested stockoptions granted prior to our adoption of FAS 123R under the fair valuemethod and expense those amounts in the income statement over the stock option’sremaining vesting period.

 

**CompensationCommittee Report**

 

The compensation committeehas reviewed and discussed the Compensation Discussion and Analysis withmanagement. Based upon such review, the related discussions and such othermatters deemed relevant and appropriate by the compensation committee, thecompensation committee has recommended to our board of directors that theCompensation Discussion and Analysis be included as part of the Company’s Form 10-K.

 
|   |   | This report is submitted by the compensation committee:      |
|--------|--------|--------------------------------------------------------------|
|   |   | Daniel J. Sullivan, Chairman  Todd F. Bourell  David S. Katz |

 

**CompensationCommittee Interlocks and Insider Participation**

 

During 2008, Messrs. Sullivan,Bourell and Katz served as members of the compensation committee. During 2008:

 

·                  no member ofthe compensation committee was an officer or employee of Gevity or any of oursubsidiaries;

·                  none of ourexecutive officers was a director of another entity where one of that entity’sexecutive officers served on our compensation committee;

·                  no member ofthe compensation committee entered into any transaction with us in which theamount involved exceeded $120,000; and

·                  none of ourexecutive officers served on the compensation committee of any entity where oneof that entity’s executive officers served on our compensation committee, andnone of our executive officers served on the compensation committee of anotherentity where one of that entity’s executive officers served as a director onour board.

 

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**2008 Summary CompensationTable**

 

The following table showscash and non-cash compensation for the year ended December 31, 2008, December 31,2007 and December 31, 2006, where applicable, for (i) our chiefexecutive officer, (ii) our senior vice president and chief financialofficer; (iii) our other three most highly-compensated executive officers;and (iv) Mr. Sladnick, who served as our senior vice president andchief administrative officer through July 31, 2008.

 
| **Name and Principal  Position** | ** ** | **Year** | ** ** | **Salary  ($)(2)** | ** ** | **Bonus  ($)(3)** | ** ** | **Stock  Awards  ($)(4)** | ** ** | **Option  Awards  ($)(5)** | ** ** | **Non-Equity  Incentive Plan  Compensation  ($)(6)** | ** ** | **All Other  Compensation  ($)(7)** | ** ** | **Total  ($)** | ** ** |
|--------------------------------------------|------------|----------|------------|--------------------|------------|-------------------|------------|---------------------------|------------|----------------------------|------------|-----------------------------------------------------------|------------|------------------------------------------|------------|----------------|------------|
| Michael J.  Lavington,                     |       | 2008     |       | 172,039            |       | 130,000           |       | 0                         |       | 27,005                     |       | 230,750                                                   |       | 45,519                                   |       | 605,313        |       |
| Chief  Executive Officer (1)          |       | 2007     |       | N/A                |       | N/A               |       | N/A                       |       | N/A                        |       | N/A                                                       |       | N/A                                      |       | N/A            |       |
|                                       |       | 2006     |       | N/A                |       | N/A               |       | N/A                       |       | N/A                        |       | N/A                                                       |       | N/A                                      |       | N/A            |       |
| Garry J. Welsh,                            |       | 2008     |       | 485,308            |       | 100,000           |       | 107,418                   |       | 66,028                     |       | 181,987                                                   |       | 4,760                                    |       | 945,501        |       |
| SVP and Chief Financial                    |       | 2007     |       | 306,969            |       | 100,000           |       | 21,274                    |       | 26,641                     |       | 0                                                         |       | 394,268                                  |       | 849,152        |       |
| Officer (1)                                |       | 2006     |       | N/A                |       | N/A               |       | N/A                       |       | N/A                        |       | N/A                                                       |       | N/A                                      |       | N/A            |       |
| James E. Hardee,                           |       | 2008     |       | 414,808            |       | 0                 |       | 93,971                    |       | 43,564                     |       | 154,965                                                   |       | 4,760                                    |       | 712,068        |       |
| SVP and Chief  Sales and                   |       | 2007     |       | 130,308            |       | 100,000           |       | 14,895                    |       | 16,512                     |       | 0                                                         |       | 399,341                                  |       | 661,056        |       |
| Marketing Officer  (1)                     |       | 2006     |       | N/A                |       | N/A               |       | N/A                       |       | N/A                        |       | N/A                                                       |       | N/A                                      |       | N/A            |       |
| Paul E. Benz,                              |       | 2008     |       | 372,500            |       | 0                 |       | 82,489                    |       | 147,701                    |       | 129,995                                                   |       | 4,760                                    |       | 737,445        |       |
| SVP and Chief                              |       | 2007     |       | 313,269            |       |  0           |       | 16,541                    |       | 134,061                    |       | 75,000                                                    |       | 4,660                                    |       | 543,531        |       |
| Information  Officer                       |       | 2006     |       | 120,015            |       | 85,000            |       | 8,337                     |       | 66,847                     |       | 0                                                         |       | 3,993                                    |       | 284,192        |       |
| Edwin, E.  Hightower, Jr.             |       | 2008     |       | 278,077            |       | 45,000            |       | 52,304                    |       | 18,483                     |       | 49,999                                                    |       | 4,760                                    |       | 448,623        |       |
| SVP and Chief  Legal                  |       | 2007     |       | N/A                |       | N/A               |       | N/A                       |       | N/A                        |       | N/A                                                       |       | N/A                                      |       | N/A            |       |
| Officer (1)                                |       | 2006     |       | N/A                |       | N/A               |       | N/A                       |       | N/A                        |       | N/A                                                       |       | N/A                                      |       | N/A            |       |
| Clifford M.  Sladnick,                     |       | 2008     |       | 234,000            |       | 0                 |       | 69,941                    |       | 95,562                     |       | 0                                                         |       | 572,089                                  |       | 971,592        |       |
| Former SVP and  Chief                      |       | 2007     |       | 358,077            |       | 0                 |       | 132,455                   |       | 240,631                    |       | 40,000                                                    |       | 4,660                                    |       | 775,823        |       |
| Administrative Officer                     |       | 2006     |       | 349,039            |       | 0                 |       | 132,434                   |       | 200,229                    |       | 100,000                                                   |       | 43,498                                   |       | 825,200        |       |

 

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(1)                                 Messrs. Welshand Hardee were not employed by the Company in 2006. Mr. Hightower was nota named executive officer prior to his appointment as the Company’s chief legalofficer on July 1, 2008. Mr. Lavington became the CEO of the Companyon September 15, 2008.  See thedirector compensation table, below, for information regarding Mr. Lavington’scompensation while serving as the chairman of the board and CEO designate from October 2007through September 14, 2008, which compensation is not reflected in thetable above.

(2)                                 Amountsrepresent salary compensation paid to each named executive officer for theapplicable fiscal year.

(3)                                 Representsdiscretionary bonuses paid in 2009 for 2008 service, paid in 2008 for 2007service and paid in 2007 for 2006 service, respectively. The 2008 bonus paid toMr. Lavington represents the sign-on bonus paid to Mr. Lavington uponhis official appointment as CEO of the Company.  The 2008 bonus paid to Mr. Welsh was adiscretionary bonus in recognition of his significant contribution made toimprove the Company’s working capital, as well as his additional work asinterim CEO from January 1, 2008 through September 14, 2008.  The 2008 bonus paid to Mr. Hightower wasa discretionary bonus for his role as a vice president for the first six monthsof 2008.

(4)                                 This columnrepresents the dollar amount recognized for financial statement reportingpurposes with respect to the 2008 fiscal year for the fair value of restrictedstock awards granted in 2008 as well as prior fiscal years, in accordance withFAS 123R disregarding the impact of estimated forfeitures related toservice-based vesting conditions. For restricted stock awards with time-basedvesting conditions, fair value is calculated using the closing price of Gevitystock on the date of grant. For restricted stock awards with performance basedvesting conditions, fair value is calculated using the Monte Carlo Simulationmodel. For additional information, refer to note 15 of the Gevityfinancial statements in our Form 10-K for the year ended December 31,2008. See the 2008 Grants of Plan-Based Awards Table for information on awardsmade in 2008. These amounts reflect our Company’s compensation expense forthese awards, and do not correspond to the actual value that may be recognizedby the named executive officers.  For Mr. Lavington,the 2008 expense does not include expense related to his stock awards receivedfor his service on the board of directors; such amounts are included within thedirector compensation table, below.

(5)                                 This columnrepresents the dollar amount recognized for financial statement reportingpurposes with respect to the 2008 fiscal year for the fair value of stock optionsgranted in 2008, as well as prior fiscal years, in accordance withFAS 123R disregarding the impact of estimated forfeitures related toservice-based vesting conditions. For additional information on the valuationassumptions with respect to the 2006-2008 grants, refer to note 15 of theGevity financial statements in our Form 10-K for the year ended December 31,2008. For information on the valuation assumptions with respect to grants madein 2005, refer to the Equity note of the Gevity financial statements in our Form 10-Kfor the year ended December 31, 2005. See the 2008 Grants of Plan-BasedAwards Table for information on options granted in 2008. These amounts reflectour compensation expense for these awards and do not correspond to the actual valuethat may be recognized by the named executive officers.

 

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(6)                                 Representsnon-equity incentive plan compensation paid in 2009 for services performed in2008, paid in 2008 for services performed in 2007 and paid in 2007 for servicesperformed in 2006, respectively.

(7)                                 Informationregarding all other compensation is set forth below.

 

**All OtherCompensation Table for 2008**

 

*Perquisitesand Other Personal Benefits*

* *
| **Name**                     | ** ** | **Year** | ** ** | **Health  Benefits (1)** | ** ** | **Expense  Allowance ($)(2)** | ** ** | **Other ($)(3)** | ** ** | **Total Perquisites and  Other Personal  Benefits ($)** | ** ** |
|------------------------------|------------|----------|------------|-------------------------------|------------|------------------------------------|------------|-----------------------|------------|-----------------------------------------------------------------------------|------------|
| Michael J. Lavington         |       | 2008     |       | —                        |       |                               | 5,833      |                  |       | 23,820                                                                      |       |   | 29,653 |   |   |
| Garry J. Welsh               |       | 2008     |       | —                        |       |                               | 0          |                  |       | 0                                                                           |       |   | 0 |   |   |
| James E. Hardee              |       | 2008     |       | —                        |       |                               | 0          |                  |       | 0                                                                           |       |   | 0 |   |   |
| Paul E. Benz                 |       | 2008     |       | —                        |       |                               | 0          |                  |       | 0                                                                           |       |   | 0 |   |   |
| Edwin E. Hightower, Jr. |       | 2008     |       | —                        |       |                               | 0          |                  |       | 0                                                                           |       |   | 0 |   |   |
| Clifford M. Sladnick         |       | 2008     |       | —                        |       |                               | 0          |                  |       | 0                                                                           |       |   | 0 |   |   |

 

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(1)                                 The Companyprovides enhanced health and welfare benefits to each of the named executiveofficers as described in “Compensation Discussion and Analysis.”

(2)                                 For adescription of Mr. Lavington’s expense allowance, see “CompensationDiscussion and Analysis.”

(3)                                 The Companypaid for Mr. Lavington’s legal costs related to the obtainment of his workauthorization.

 

*AdditionalAll Other Compensation*

* *
| **Name**                     | ** ** | **Year** | ** ** | **Severance ($)(1)** | ** ** | **401K Match  ($)** | ** ** | **Life  Insurance  Premiums ($)** | ** ** | **Tax  Gross-up ($)(2)** | ** ** | **Total Additional  All Other  Compensation ($)** | ** ** |
|------------------------------|------------|----------|------------|---------------------------|------------|--------------------------|------------|----------------------------------------|------------|-------------------------------|------------|------------------------------------------------------------------|------------|
| Michael J. Lavington         |       | 2008     |       | 0                         |       |                     | 2,137      |                                   | 67         |                          |       | 13,662                                                           |       |   | 15,866 |   |   |
| Garry J. Welsh               |       | 2008     |       | 0                         |       |                     | 4,600      |                                   | 160        |                          |       | 0                                                                |       |   | 4,760 |   |   |
| James E. Hardee              |       | 2008     |       | 0                         |       |                     | 4,600      |                                   | 160        |                          |       | 0                                                                |       |   | 4,760 |   |   |
| Paul E. Benz                 |       | 2008     |       | 0                         |       |                     | 4,600      |                                   | 160        |                          |       | 0                                                                |       |   | 4,760 |   |   |
| Edwin E. Hightower, Jr. |       | 2008     |       | 0                         |       |                     | 4,600      |                                   | 160        |                          |       | 0                                                                |       |   | 4,760 |   |   |
| Clifford M. Sladnick         |       | 2008     |       | 567,396                   |       |                     | 4,600      |                                   | 93         |                          |       | 0                                                                |       |   | 572,089 |   |   |

 

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(1)                                 Amountrepresents total severance payments to Mr. Sladnick, in connection withhis resignation, including: severance of $360,000 (to be paid in 2009),settlement of travel-related expenses of $125,000 (incurred prior to January 1,2008), settlement of bonus earned in 2008 of $60,030 (paid in 2009), $2,432 forunused paid time off and the estimated cost of health and welfare benefitsprovided by the Company during the 18 month period following his July 31,2008 separation. Amounts do not include $71,968 paid to Mr. Sladnick undera Consulting Agreement for the period August 1, 2008 through January 31,2009.  For additional information, pleasesee “Compensation Paid to Named Executive Officer Who Departed in 2008,” above.

(2)                                 Amountrepresents the tax gross-up for the other payments listed under Perquisites andOther Personal Benefits.

 

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**2008 Grantof Plan Based Awards**

 

The following table setsforth information regarding grants during 2008 to our named executive officers.

 
| ** **            | ** ** | ** **      | ** ** | **Estimated Future Payouts Under  Non-Equity Incentive Plan Awards(1)** | ** ** | **Performance-  Based Stock  Awards:  Number of  Shares of Stock** | ** ** | **All Other  Stock  Awards:  Number of  Shares of  Stock or** | ** ** | **All Other  Option  Awards:  Number  of Securities** | ** ** | **Exercise or  Base Price  of Option** | ** ** | **Grant Date  Fair Value of  Stock and  Option** | ** ** |
|-----------------------|------------|-----------------|------------|-------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|-------------------------------------------------------|------------|----------------------------------------------------------------------|------------|
| **Name**              | ** ** | **Grant  Date** | ** ** | **Threshold  ($)**                                                                                    | ** ** | **Target  ($)**                                                                        | ** ** | **Maximum  ($)**                                                                  | ** ** | **or Stock Units  (#)**                               | ** ** | **Units  (#)**                                        | ** ** | **Underlying  Options (#)**                                     | ** ** | **Awards  ($/Sh)** | ** ** | **Awards  ($)(2)** | ** ** |
| Michael J.            |       | 10/10/2008      |       | 461,500                                                                                               |       | 923,000                                                                                |       | 1,384,500                                                                         |       |                                                            |       |                                                  |       |                                                                 |       |   |   |   |   |
| Lavington (3)         |       | 9/15/2008       | (4)        |                                                                                                  |       |                                                                                   |       |                                                                              |       |                                                            |       |                                                  |       | 125,000                                                              |       | 7.40 |   | 366,075 |   |
| Garry J. Welsh        |       | 2/25/2008       |       | 156,077                                                                                               |       | 312,156                                                                                |       | 468,233                                                                           |       |                                                            |       |                                                  |       |                                                                 |       |   |   |   |   |
|                  |       | 5/22/2008       | (5)        |                                                                                                  |       |                                                                                   |       |                                                                              |       |                                                            |       | 21,000                                                |       |                                                                 |       |   |   | 129,150 |   |
|                  |       | 5/22/2008       | (6)        |                                                                                                  |       |                                                                                   |       |                                                                              |       | 46,000                                                          |       |                                                  |       |                                                                 |       |   |   | 166,860 |   |
| James E. Hardee       |       | 2/25/2008       |       | 160,000                                                                                               |       | 320,000                                                                                |       | 480,000                                                                           |       |                                                            |       |                                                  |       |                                                                 |       |   |   |   |   |
|                  |       | 5/22/2008       | (5)        |                                                                                                  |       |                                                                                   |       |                                                                              |       |                                                            |       | 21,000                                                |       |                                                                 |       |   |   | 129,150 |   |
|                  |       | 5/22/2008       | (6)        |                                                                                                  |       |                                                                                   |       |                                                                              |       | 46,000                                                          |       |                                                  |       |                                                                 |       |   |   | 166,860 |   |
| Paul E. Benz          |       | 2/20/2008       | (7)        |                                                                                                  |       |                                                                                   |       |                                                                              |       |                                                            |       | 7,500                                                 |       |                                                                 |       |   |   | 51,975 |   |
|                  |       | 2/20/2008       | (7)        |                                                                                                  |       |                                                                                   |       |                                                                              |       |                                                            |       |                                                  |       | 25,000                                                               |       | 6.93 |   | 60,823 |   |
|                  |       | 2/25/2008       |       | 120,060                                                                                               |       | 240,120                                                                                |       | 360,180                                                                           |       |                                                            |       |                                                  |       |                                                                 |       |   |   |   |   |
|                  |       | 5/22/2008       | (5)        |                                                                                                  |       |                                                                                   |       |                                                                              |       |                                                            |       | 21,000                                                |       |                                                                 |       |   |   | 129,150 |   |
|                  |       | 5/22/2008       | (6)        |                                                                                                  |       |                                                                                   |       |                                                                              |       | 46,000                                                          |       |                                                  |       |                                                                 |       |   |   | 166,860 |   |
| Edwin E.              |       | 7/01/2008       |       | 50,025                                                                                                |       | 100,050                                                                                |       | 150,075                                                                           |       |                                                            |       |                                                  |       |                                                                 |       |   |   |   |   |
| Hightower, Jr.   |       | 7/01/2008       | (5)        |                                                                                                  |       |                                                                                   |       |                                                                              |       |                                                            |       | 21,000                                                |       |                                                                 |       |   |   | 109,830 |   |
|                  |       | 7/01/2008       | (6)        |                                                                                                  |       |                                                                                   |       |                                                                              |       | 46,000                                                          |       |                                                  |       |                                                                 |       |   |   | 129,260 |   |
| Clifford M.  Sladnick |       | N/A             |       | N/A                                                                                                   |       | N/A                                                                                    |       | N/A                                                                               |       | N/A                                                             |       | N/A                                                   |       | N/A                                                                  |       | N/A |   | N/A |   |

 

----

(1)                                 The amountsrepresent the awards for annual cash incentives in 2008 except for Mr. Hightower’saward which represents his pro rated time in the position of senior vicepresident and chief legal officer (effective July 1, 2008). Actualpayments under these awards have already been determined and are included inthe 2008 Summary Compensation Table. For a detailed discussion of annual cashincentives, please see the “Compensation Discussion and Analysis” section.

(2)                                 This columnshows the full grant date fair value of stock and stock option awards grantedto the named executive officers in 2008. The full grant date fair value is theamount that we would expense in our financial statements over the award’svesting schedule. See footnotes 4 and 5 of the 2008 Summary CompensationTable for a discussion of fair value calculation.

(3)                                 This table doesnot include the May 21, 2008 stock award of 10,050 shares received by Mr. Lavingtonin connection with his board service. The amount expensed in 2008 for this award is included within thedirector compensation table, below.

(4)                                 Reflectsoptions granted as a sign-on grant in connection with Mr. Lavington’scommencement of employment as our CEO. These options vest and becomeexercisable ratably in four equal annual installments, beginning one year afterthe grant date and stock vesting shall accelerate upon completion of the Merger.

(5)                                 Represents thenumber of restricted stock awards with time-based vesting conditions granted in2008 to the named executive officers. These stock awards vest ratably in threeequal installments beginning one year after the date of grant and stock vestingshall accelerate upon completion of the Merger. During the vesting period, eachstock award entitles the individual to receive quarterly dividend payments asdeclared by us.

(6)                                 Represents thenumber of stock awards with performance based vesting conditions granted in2008 to the named executive officers. These awards will vest based on stock price targets of $7, $9, $12 and$15 over a four year period.  Attainmentof stock price targets will be achieved if the price is at or above the targetfor five consecutive trading days in December of each year, or, tentrading days in December of each year.  No more than 25% of the performance based vesting component of the awardcan vest in year one, 50% of the award in year two, 75% of the award in yearthree and 100% of the award in year four. If 25% of the award does not vest in any given year, the shares can vestin December of any of the following years in which the stock price targetis achieved.  In connection with theMerger, these performance based shares will be cancelled without anyconsideration.

(7)                                 This rowrepresents an equity award granted in 2008 to Mr. Benz.  This equity award vests ratably in four equalinstallments beginning one year after the date of grant.  During the vesting period, the stock awardentitles Mr. Benz to receive quarterly dividend payments as declared by theCompany.

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**2008Outstanding Equity Awards at Fiscal Year-End**

 

The following table setsforth information regarding the number of shares of unexercised stock optionsand the number of shares and value of restricted stock outstanding on December 31,2008 for our executive officers. Mr. Sladnick did not have any outstandingequity awards on December 31, 2008.

 

 
| ** **                | ** ** | **Option Awards**       | ** ** | **Stock Award**                                                  | ** ** |
|---------------------------|------------|------------------------------|------------|-----------------------------------------------------------------------|------------|
| **Name**                  | ** ** | **Grant Date**          | ** ** | **Number of  Securities  Underlying  Options  Exercisable  (#)** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  Unexercisable  (#)** | ** ** | **Option  Exercise  Price ($)** | ** ** | **Option  Expiration  Date** | ** ** | **Grant Date** | ** ** | **Number of  Shares or  Units of  Stock That  Have Not  Vested (#)(1)** | ** ** | **Market  Value of  Shares or  Units of  Stock  That  Have Not  Vested  ($)(2)** | ** ** | **Performance-  Based Stock****Awards:  Number of  Shares or Units  of Stock That  Have Not  Vested  (#)(1)** | ** ** | **Performance-  Based Stock  Awards:  Market  Value of  Shares or  Units of  Stock That  Have Not  Vested  ($)(2)** | ** ** |
| Michael J.  Lavington (8) |       | 9/15/2008(3)                 |       |                                                                  |       |   | 125,000 |   |   | 7.40 |   |   | 9/15/2018 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Garry J. Welsh            |       | 8/06/2007(5)                 |       | 15,000                                                                |       |   | 45,000 |   |   | 14.07 |   |   | 8/06/2017 |   |   | 8/06/2007(5) |   |   | 11,250 |   |   | 16,988 |   |   |   |   |   |   |   |   |
|                      |       |                         |       |                                                                  |       |   |   |   |   |   |   |   |   |   |   | 5/22/2008(5) |   |   | 21,000 |   |   | 31,710 |   |   |   |   |   |   |   |   |
|                      |       |                         |       |                                                                  |       |   |   |   |   |   |   |   |   |   |   | 5/22/2008(6) |   |   |   |   |   |   |   |   | 46,000 |   |   | 69,460 |   |   |
| James E. Hardee           |       | 8/15/2007(5)                 |       | 11,250                                                                |       |   | 33,750 |   |   | 12.58 |   |   | 8/15/2017 |   |   | 8/15/2007(5) |   |   | 9,375 |   |   | 14,156 |   |   |   |   |   |   |   |   |
|                      |       |                         |       |                                                                  |       |   |   |   |   |   |   |   |   |   |   | 5/22/2008(5) |   |   | 21,000 |   |   | 31,710 |   |   |   |   |   |   |   |   |
|                      |       |                         |       |                                                                  |       |   |   |   |   |   |   |   |   |   |   | 5/22/2008(6) |   |   |   |   |   |   |   |   | 46,000 |   |   | 69,460 |   |   |
| Paul E. Benz              |       | 7/03/2006(4)                 |       | 25,000                                                                |       |   | 25,000 |   |   | 26.44 |   |   | 7/3/2016 |   |   | 7/01/2006(4) |   |   | 1,250 |   |   | 1,888 |   |   |   |   |   |   |   |   |
|                      |       | 2/20/2008(3)                 |       |                                                                  |       |   | 25,000 |   |   | 6.93 |   |   | 2/20/2018 |   |   | 2/20/2008(3) |   |   | 7,500 |   |   | 11,325 |   |   |   |   |   |   |   |   |
|                      |       |                         |       |                                                                  |       |   |   |   |   |   |   |   |   |   |   | 5/22/2008(5) |   |   | 21,000 |   |   | 31,710 |   |   |   |   |   |   |   |   |
|                      |       |                         |       |                                                                  |       |   |   |   |   |   |   |   |   |   |   | 5/22/2008(6) |   |   |   |   |   |   |   |   | 46,000 |   |   | 69,460 |   |   |
| Edwin E.                  |       | 12/15/2003    |       | 915                                                                   |       |   |   |   |   | 21.85 |   |   | 12/15/2013 |   |   | 2/15/2005(7) |   |   | 226 |   |   | 341 |   |   |   |   |   |   |   |   |
| Hightower, Jr        |       | 2/15/2005(7)                 |       | 2,034                                                                 |       |   | 678 |   |   | 21.14 |   |   | 2/15/2015 |   |   | 2/22/2006(4) |   |   | 714 |   |   | 1,078 |   |   |   |   |   |   |   |   |
|                      |       | 2/22/2006(4)                 |       | 2,140                                                                 |       |   | 2,141 |   |   | 29.22 |   |   | 2/22/2016 |   |   | 7/01/2008(5) |   |   | 21,000 |   |   | 31,710 |   |   |   |   |   |   |   |   |
|                      |       |                         |       |                                                                  |       |   |   |   |   |   |   |   |   |   |   | 7/01/2008(6) |   |   |   |   |   |   |   |   | 46,000 |   |   | 69,460 |   |   |

 

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(1)                                 Restrictedstock awards are entitled to dividends declared by us under the terms of therestricted stock grants.

(2)                                 All amounts areas of December 31, 2008 and dollar values are based on the closing priceof our common stock on December 31, 2008 of $1.51.

(3)                                 Theunexercisable option awards and restricted stock awards will vest ratably overthe next four years on the anniversary date of the grant.

(4)                                 Theunexercisable option awards and restricted stock awards will vest ratably overthe next two years on the anniversary date of the grant.

(5)                                 Theunexercisable option awards and restricted stock awards will vest ratably overthe next three years on the anniversary date of the grant.

(6)                                 Representsrestricted stock awards with performance based vesting conditions granted in2008 to the named executive officers. These awards will vest based on stock price targets of $7, $9, $12 and$15 over a four year period.  Attainmentof stock price targets will be achieved if the price is at or above the targetfor five consecutive trading days in December of each year, or, tentrading days in December of each year.  No more than 25% of the performance based vesting component of the awardcan vest in year one, 50% of the award in year two, 75% of the award in yearthree and 100% of the award in year four. If 25% of the award does not vest in any given year, the shares can vestin December of any of the following years in which the stock price targetis achieved.

(7)                                 Theunexercisable option award and restricted stock award will vest in one year onthe anniversary date of the grant.

(8)                                 This table doesnot include the following outstanding equity awards previously received by Mr. Lavingtonfor his board of director service: 10,000 currently exercisable options with an exercise price of $24.23and expiring on September 15, 2016; 11,618 of restricted stock which has amarket value of $17,543 as of December 31, 2008 and which will vest overthe next two years.  The amount expensedin 2008 for these awards is included in the director compensation table, below.

 

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**2008 OptionExercises and Stock Vested**

 

The following table setsforth information regarding the number and value of stock options exercised andstock vested during 2008 for our named executive officers.

 
| ** **                   | ** ** | **Option Awards**                                              | ** ** | **Stock Awards**                              | ** ** |
|------------------------------|------------|---------------------------------------------------------------------|------------|----------------------------------------------------|------------|
| **Name**                     | ** ** | **Number of  Shares Acquired  on Exercise (#)** | ** ** | **Value Realized on  Exercise ($)** | ** ** | **Number of Shares  Acquired on  Vesting (#)** | ** ** | **Value realized on  Vesting ($)** | ** ** |
| Michael J. Lavington         |       | 0                                                                   |       |                                               | 0          |   |   | 0 |   |   | 0 | (1) |   |   |
| Garry J. Welsh               |       | 0                                                                   |       |                                               | 0          |   |   | 3,750 |   |   | 29,775 | (2) |   |   |
| James E. Hardee              |       | 0                                                                   |       |                                               | 0          |   |   | 3,125 |   |   | 25,781 | (3) |   |   |
| Paul E. Benz                 |       | 0                                                                   |       |                                               | 0          |   |   | 625 |   |   | 3,363 | (4) |   |   |
| Edwin E. Hightower, Jr. |       | 0                                                                   |       |                                               | 0          |   |   | 583 |   |   | 3,387 | (5) |   |   |
| Clifford M. Sladnick         |       | 0                                                                   |       |                                               | 0          |   |   | 6,250 |   |   | 31,750 | (6) |   |   |

 

----

(1)                                 This table doesnot include 1,567 shares that vested on May 16, 2008 with a market valueof $10,091 that were received in connection with Mr. Lavington’s boardservice.  The value realized by Mr. Lavingtonwas determined by multiplying the 1,567 shares received by $6.44, the closingprice of the common stock on May 15, 2008, the business day immediatelypreceding May 16, 2008, the date the shares vested.

(2)                                 The valuerealized by Mr. Welsh was determined by multiplying the 3,750 sharesreceived by $7.94, the closing price of the common stock on August 5,2008, the business day immediately preceding August 6, 2008, the date theshares vested.

(3)                                 The valuerealized by Mr. Hardee was determined by multiplying the 3,125 sharesreceived by $8.25, the closing price of the common stock on August 14,2008, the business day immediately preceding August 15, 2008, the date theshares vested.

(4)                                 The valuerealized by Mr. Benz was determined by multiplying the 625 shares receivedby $5.38, the closing price of the common stock on June 30, 2008, thebusiness day immediately preceding July 1, 2008, the date the sharesvested.

(5)                                 The valuerealized by Mr. Hightower was determined by multiplying the 583 sharesreceived by $5.81, the closing price of the common stock on January 14,2008, the business day immediately preceding January 15, 2008, the datethe shares vested.

(6)                                 The valuerealized by Mr. Sladnick was determined by multiplying the 6,250 sharesreceived by $5.08, the closing price of the common stock on July 10, 2008,the business day immediately preceding July 11, 2008, the date the sharesvested.

 

**PotentialPayments Upon Termination or Change in Control**

 

The following tablesillustrate potential payments to our named executive officers under certainhypothetical termination scenarios assuming the termination date of December 31,2008.  Although the calculations areintended to provide reasonable estimates of potential payments, they are basedon assumptions, not actual circumstances, and may not represent the actualamount an executive would receive if an eligible termination event were tooccur on December 31, 2008.  Thechange in control termination payments under the hypothetical termination dateof December 31, 2008 are based on a set of different assumptions,including but not limited to, a different stock price, different W-2 baseyears, exclusion of pro rata bonus at target, and exclusion of certain equityawards made in 2009, than the estimated change in control termination paymentsassuming the completion of the Merger on the previously estimated closing dateof May 29, 2009.  For estimatedpayments upon the completion of the Merger on May 29, 2009, please referto “Change in Control/Severance Payment Assuming Completion of the Merger”below, and previously disclosed in our Proxy Statement, filed on April 15,2009.

 

Mr. Sladnick was notincluded in this section due to his departure during the course of 2008.Payouts to Mr. Sladnick are described in detail under “Compensation toNamed Executive Officer Who Departed in 2008.”

 

In addition, we havenon-compete arrangements with Messrs. Lavington, Hardee, Benz, Hightowerand Sladnick. We do not have any non-compete arrangements with Mr. Welsh. Generally,each executive or former executive is restricted from directly competing withour business for one to two years after separating from the Company.

 

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| ** **                     | ** ** | **Michael J. Lavington** | ** ** |
|--------------------------------|------------|------------------------------------|------------|
| ** **                     | ** ** | **Death  ($)**                     | ** ** | **Disability ($)** | ** ** | **Voluntary  Resignation/  Retirement ($)(1)** | ** ** | **Involuntary  Termination w/o  Cause ($)** | ** ** | **Involuntary  Termination after  Change in Control  w/o Cause or  Constructive  Termination ($)** | ** ** |
| Cash Value (2,3)               |       | N/A                                |       | N/A |   |   | N/A |   |   | 1,420,000 |   |   | 4,899,000 |   |   |
| Equity  Acceleration Value (4) |       | N/A                                |       | N/A |   |   | N/A |   |   | N/A |   |   | 17,543 |   |   |
| Other Benefits  Value (5)      |       | N/A                                |       | N/A |   |   | N/A |   |   | N/A |   |   | 33,677 |   |   |
| Gross-up Payment  (6)          |       | N/A                                |       | N/A |   |   | N/A |   |   | N/A |   |   | 2,179,079 |   |   |
| Totals                         |       | 0                                  |       | 0 |   |   | 0 |   |   | 1,420,000 |   |   | 7,129,299 |   |   |

 

----

(1)                             Mr. Lavingtonis not eligible for retirement as of December 31, 2008.

(2)                             In the event ofdeath, disability or retirement, reflects no severance.  In the event of involuntary terminationwithout cause, reflects two times highest annual base salary 12-month prior totermination.  In the event of atermination after a change in control without cause or a constructivetermination, reflects three times salary and greater of target annual incentiveor average annual incentives over three years (in this case, it is targetannual incentive of $923,000).

(3)                             Does notinclude any amounts attributable to the 2008 annual incentive award that waspaid in March 2009 and disclosed in the Summary Compensation Table.

(4)                             Reflectsin-the-money value of unvested stock options and the fair market value ofunvested restricted stock based on a closing stock price of $1.51 on December 31,2008.

(5)                             Represents thevalue attributable to continuation of health and welfare benefits during theseverance period.

(6)                             Thiscalculation is an estimate for disclosure purposes only.  Payment includes the excise tax, plus theeffect of 35% federal income tax and 1.45% FICA-HI taxes on the excisetax.  Payments on an actual change incontrol may differ based on factors such as transaction price, timing ofemployment termination and payments, changes in compensation, and reasonablecompensation analyses.  For purposes ofthis calculation, we did not treat any portion of the compensation asreasonable compensation for services rendered prior to the change in control orattribute any value to non-competition covenants.

 
| ** **                    | ** ** | **Garry J. Welsh** | ** ** |
|-------------------------------|------------|------------------------------|------------|
| ** **                    | ** ** | **Death  ($)**               | ** ** | **Disability ($)** | ** ** | **Voluntary  Resignation/  Retirement ($)(1)** | ** ** | **Involuntary  Termination w/o  Cause ($)** | ** ** | **Involuntary  Termination after  Change in Control  w/o Cause or  Constructive  Termination ($)** | ** ** |
| Cash Value (2,3)              |       | N/A                          |       |   | N/A |   |   | N/A |   |   | 468,000 |   |   | 1,560,312 |   |   |
| Equity Acceleration Value (4) |       | N/A                          |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 48,698 |   |   |
| Other Benefits Value (5)      |       | N/A                          |       |   | N/A |   |   | N/A |   |   | 13,688 |   |   | 52,376 |   |   |
| Gross-up Payment (6)          |       | N/A                          |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 0 |   |   |
| Totals                        |       | 0                            |       |   | 0 |   |   | 0 |   |   | 481,688 |   |   | 1,661,386 |   |   |

 

----

(1)                             Mr. Welshis not eligible for retirement as of December 31, 2008.

(2)                             In the event ofdeath, disability or retirement, reflects no severance.  In the event of involuntary terminationwithout cause, reflects one times highest annual base salary 12-month prior totermination.  In the event of a terminationafter a change in control without cause or a constructive termination, reflectstwo times salary and greater of target annual incentive or average annualincentives over three years (in this case, it is target annual incentive of$312,156).

(3)                             Does notinclude any amounts attributable to the 2008 annual incentive award that waspaid in March 2009 and disclosed in the Summary Compensation Table.

(4)                             Reflectsin-the-money value of unvested stock options and the fair market value ofunvested restricted stock based on a closing stock price of $1.51 on December 31,2008.

(5)                             Represents thevalue attributable to continuation of health and welfare benefits andoutplacement (in the case of change in control termination) during theseverance period.

(6)                             Thiscalculation is an estimate for disclosure purposes only.  Payment includes the excise tax, plus theeffect of 35% federal income tax and 1.45% FICA-HI taxes on the excisetax.  Payments on an actual change incontrol may 

 

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differbased on factors such as transaction price, timing of employment terminationand payments, changes in compensation, and reasonable compensationanalyses.  For purposes of thiscalculation, we did not treat any portion of the compensation as reasonablecompensation for services rendered prior to the change in control or attributeany value to non-competition covenants.

 
| ** **                    | ** ** | **James E. Hardee** | ** ** |
|-------------------------------|------------|-------------------------------|------------|
| ** **                    | ** ** | **Death  ($)**                | ** ** | **Disability ($)** | ** ** | **Voluntary  Resignation/  Retirement ($)(1)** | ** ** | **Involuntary  Termination w/o  Cause ($)** | ** ** | **Involuntary  Termination after  Change in Control  w/o Cause or  Constructive  Termination ($)** | ** ** |
| Cash Value (2,3)              |       | N/A                           |       |   | N/A |   |   | N/A |   |   | 400,000 |   |   | 1,440,000 |   |   |
| Equity Acceleration Value (4) |       | N/A                           |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 45,866 |   |   |
| Other Benefits Value (5)      |       | N/A                           |       |   | N/A |   |   | N/A |   |   | 12,930 |   |   | 50,860 |   |   |
| Gross-up Payment (6)          |       | N/A                           |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 480,745 |   |   |
| Totals                        |       | 0                             |       |   | 0 |   |   | 0 |   |   | 412,930 |   |   | 2,017,471 |   |   |

 

----

(1)                             Mr. Hardeeis not eligible for retirement as of December 31, 2008.

(2)                             In the event ofdeath, disability or retirement, reflects no severance.  In the event of involuntary terminationwithout cause, reflects one times highest annual base salary 12-month prior totermination.  In the event of atermination after a change in control without cause or a constructivetermination, reflects two times salary and greater of target annual incentiveor average annual incentives over three years (in this case, it is targetannual incentive of $320,000).

(3)                             Does notinclude any amounts attributable to the 2008 annual incentive award that waspaid in March 2009 and disclosed in the Summary Compensation Table.

(4)                             Reflectsin-the-money value of unvested stock options and the fair market value ofunvested restricted stock based on a closing stock price of $1.51 on December 31,2008.

(5)                             Represents thevalue attributable to continuation of health and welfare benefits andoutplacement (in the case of change in control termination) during theseverance period.

(6)                             Thiscalculation is an estimate for disclosure purposes only.  Payment includes the excise tax, plus theeffect of 35% federal income tax and 1.45% FICA-HI taxes on the excisetax.  Payments on an actual change incontrol may differ based on factors such as transaction price, timing of employmenttermination and payments, changes in compensation, and reasonable compensationanalyses.  For purposes of thiscalculation, we did not treat any portion of the compensation as reasonablecompensation for services rendered prior to the change in control or attributeany value to non-competition covenants.

 
| ** **                    | ** ** | **Paul E. Benz** | ** ** |
|-------------------------------|------------|----------------------------|------------|
| ** **                    | ** ** | **Death  ($)**             | ** ** | **Disability ($)** | ** ** | **Voluntary  Resignation/  Retirement ($)(1)** | ** ** | **Involuntary  Termination w/o  Cause ($)** | ** ** | **Involuntary  Termination after  Change in Control  w/o Cause or  Constructive  Termination ($)** | ** ** |
| Cash Value (2,3)              |       | N/A                        |       |   | N/A |   |   | N/A |   |   | 360,000 |   |   | 1,200,240 |   |   |
| Equity Acceleration Value (4) |       | N/A                        |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 44,923 |   |   |
| Other Benefits Value (5)      |       | N/A                        |       |   | N/A |   |   | N/A |   |   | 13,688 |   |   | 52,376 |   |   |
| Gross-up Payment (6)          |       | N/A                        |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 430,010 |   |   |
| Totals                        |       | 0                          |       |   | 0 |   |   | 0 |   |   | 373,688 |   |   | 1,727,549 |   |   |

 

----

(1)                             Mr. Benzis not eligible for retirement as of December 31, 2008.

(2)                             In the event ofdeath, disability or retirement, reflects no severance.  In the event of involuntary terminationwithout cause, reflects one times highest annual base salary 12-month prior totermination.  In the event of atermination after a change in control without cause or a constructivetermination, reflects two times salary and greater of target annual incentiveor average annual incentives over three years (in this case, it is targetannual incentive of $240,120).

(3)                             Does notinclude any amounts attributable to the 2008 annual incentive award that waspaid in March 2009 and disclosed in the Summary Compensation Table.

(4)                             Reflectsin-the-money value of unvested stock options and the fair market value ofunvested restricted stock based on a closing stock price of $1.51 on December 31,2008.

 

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(5)                             Represents thevalue attributable to continuation of health and welfare benefits andoutplacement (in the case of change in control termination) during theseverance period.

(6)                             Thiscalculation is an estimate for disclosure purposes only.  Payment includes the excise tax, plus theeffect of 35% federal income tax and 1.45% FICA-HI taxes on the excisetax.  Payments on an actual change incontrol may differ based on factors such as transaction price, timing ofemployment termination and payments, changes in compensation, and reasonablecompensation analyses.  For purposes ofthis calculation, we did not treat any portion of the compensation asreasonable compensation for services rendered prior to the change in control orattribute any value to non-competition covenants.

 
| ** **                    | ** ** | **Edwin E. Hightower, Jr.** | ** ** |
|-------------------------------|------------|--------------------------------------------|------------|
| ** **                    | ** ** | **Death  ($)**                             | ** ** | **Disability ($)** | ** ** | **Voluntary  Resignation/  Retirement($)(1)** | ** ** | **Involuntary  Termination w/o  Cause ($)** | ** ** | **Involuntary  Termination after  Change in Control  w/o Cause or  Constructive  Termination ($)** | ** ** |
| Cash Value (2,3)              |       | N/A                                        |       |   | N/A |   |   | N/A |   |   | 300,000 |   |   | 1,000,200 |   |   |
| Equity Acceleration Value (4) |       | N/A                                        |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 33,129 |   |   |
| Other Benefits Value (5)      |       | N/A                                        |       |   | N/A |   |   | N/A |   |   | 4,855 |   |   | 34,709 |   |   |
| Gross-up Payment (6)          |       | N/A                                        |       |   | N/A |   |   | N/A |   |   | N/A |   |   | 384,410 |   |   |
| Totals                        |       | 0                                          |       |   | 0 |   |   | 0 |   |   | 304,855 |   |   | 1,452,448 |   |   |

 

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(1)                             Mr. Hightoweris not eligible for retirement as of December 31, 2008.

(2)                             In the event ofdeath, disability or retirement, reflects no severance.  In the event of involuntary terminationwithout cause, reflects one times highest annual base salary 12-month prior totermination.  In the event of atermination after a change in control without cause or a constructive termination,reflects two times salary and greater of target annual incentive or averageannual incentives over three years (in this case, it is target annual incentiveof $200,100).

(3)                             Does notinclude any amounts attributable to the 2008 annual incentive award that waspaid in March 2009 and disclosed in the Summary Compensation Table.

(4)                             Reflectsin-the-money value of unvested stock options and the fair market value ofunvested restricted stock based on a closing stock price of $1.51 on December 31,2008.

(5)                             Represents thevalue attributable to continuation of health and welfare benefits andoutplacement (in the case of change in control termination) during theseverance period.

(6)                             Thiscalculation is an estimate for disclosure purposes only.  Payment includes the excise tax, plus theeffect of 35% federal income tax and 1.45% FICA-HI taxes on the excisetax.  Payments on an actual change incontrol may differ based on factors such as transaction price, timing of employmenttermination and payments, changes in compensation, and reasonable compensationanalyses.  For purposes of thiscalculation, we did not treat any portion of the compensation as reasonablecompensation for services rendered prior to the change in control or attributeany value to non-competition covenants.

 

**Change inControl/Severance Payments Assuming Completion of Merger**

 

Assuming thecompletion of the Merger on May 29, 2009, and assuming the termination ofeach such executive’s employment by us without cause or by the executive forgood reason immediately following the completion of the merger, such namedexecutive officers will receive the following estimated cash severance paymentsand any gross-up payments for excise taxes that may be payable under Section 4999of the Code pursuant to the terms of his agreement (before any applicablewithholding taxes) as previously disclosed in our Proxy Statement, filed on April 15,2009.  Payments illustrated by this tableare based on a set of different assumptions than that of the Potential PaymentsUpon Termination or Change in Control, above:

 
| **Name of Executive**   | ** ** | **Cash Value ($)(1)** | ** ** | **Equity  Acceleration  Value ($)(2)** | ** ** | **Other Benefits  Value ($)(3)** | ** ** | **Gross-up  Payment  ($)(4)** | ** ** | **Total ($)** | ** ** |
|-----------------------------------|------------|---------------------------------|------------|---------------------------------------------|------------|--------------------------------------------|------------|-------------------------------|------------|--------------------|------------|
| Michael J. Lavington              |       | 5,283,373                       |       | 99,952                                      |       | 51,031                                     |       | 2,257,336                     |       | 7,691,692          |       |
| Garry J. Welsh                    |       | 1,690,306                       |       | 44,377                                      |       | 52,376                                     |       | 0                             |       | 1,787,059          |       |
| James E. Hardee                   |       | 1,573,260                       |       | 43,259                                      |       | 50,858                                     |       | 0                             |       | 1,667,377          |       |
| Paul B. Benz                      |       | 1,300,235                       |       | 34,608                                      |       | 52,376                                     |       | 475,295                       |       | 1,862,514          |       |
| Edwin E. Hightower, Jr.      |       | 1,083,529                       |       | 28,258                                      |       | 34,708                                     |       | 417,975                       |       | 1,564,470          |       |
| All executive officers as a group |       | 10,930,703                      |       | 250,454                                     |       | 241,349                                    |       | 3,150,606                     |       | 14,573,112         |       |

 

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(1)                             Represents a lump-sum payment equal to,depending upon the executive, the sum of (i) two or three times the amountof his highest annual rate of base salary during the one-year period prior tothe termination plus, (ii) two or three times his Bonus Amount plus, (iii) prorata target incentive bonus for the current fiscal year.

(2)                             Assumes all stock options and restrictedstock awards that would have vested solely based on the continued performanceof services absent the change-in-control are exchanged based on a per sharemerger consideration of $4.00 upon the change-in-control. Includes theapplication of the discount formula in Q&A 24(c) of the Section 280GRegulations for all equity awards.

(3)                             Includes value of welfare benefits andoutplacement services.

(4)                             Includes the excise tax, plus the effectof 35% federal income tax and 1.45% FICA-HI taxes on the excise tax. Theaggregate amount of the gross-up payments is an estimate only and does not takeinto account the value of restrictive covenants applicable to certainexecutives and other possible mitigating factors that could potentially reducethe amount of such payments.

 

**DirectorCompensation in Fiscal 2008**

 

In accordance with our compensation plan for non-employee directors,non-employee members of our board are paid an annual fee of $40,000 (pro ratedfor any partial year of service). Each non-employee director will also receive$1,500 for attending each meeting of our board or a committee of our board. Inaddition, non-employee committee chairs receive $3,000 per year for serving insuch capacity, except that the chairs of the compensation and audit committeereceive $10,000 and $15,000, respectively, per year (in each case, pro ratedfor any partial year of service). Each non-employee director receives an annualequity incentive award with a target cash equivalent of $60,000 under the termsand conditions applicable to non-employee directors under any then-currentCompany-sponsored equity incentive plan. Upon initial election or appointmentto our board, each non-employee director will receive an initial equityincentive award of restricted shares of the Company’s common stocksubstantially equal to $90,000 and having a three-year vesting schedulepursuant to which 50% of such shares vest on the first anniversary date of theaward and 25% each on the second and third anniversaries subject to therestrictions contained within the applicable equity incentive plan.Non-employee directors are encouraged to own shares of our common stock having avalue of not less than five times the amount of the annual fee paid to them forserving as a board member.

 
| **Name**              | ** ** | **Fees Earned or  Paid in Cash  ($)(1)** | ** ** | **Stock  Awards  ($)(2)** | ** ** | **Option  Awards  ($)(3)** | ** ** | **All Other  Compensation  ($)(4)** | ** ** | **Total  ($)** | ** ** |
|-----------------------|------------|--------------------------------------------------------------|------------|---------------------------|------------|----------------------------|------------|------------------------------------------|------------|----------------|------------|
| Michael J. Lavington  |       | 536,286                                                      |       | 40,026                    |       | 0                          |       | 24,858                                   |       | 601,170        |       |
| George B. Beitzel     |       | 100,000                                                      |       | 40,026                    |       | 0                          |       | 0                                        |       | 140,026        |       |
| Todd F. Bourell       |       | 74,500                                                       |       | 52,617                    |       | 0                          |       | 0                                        |       | 127,117        |       |
| Paul R. Daoust        |       | 58,000                                                       |       | 40,026                    |       | 0                          |       | 0                                        |       | 98,026         |       |
| Jonathan H. Kagan     |       | 89,500                                                       |       | 40,026                    |       | 0                          |       | 0                                        |       | 129,526        |       |
| David S. Katz         |       | 74,500                                                       |       | 40,026                    |       | 0                          |       | 0                                        |       | 114,526        |       |
| James F. Orr III      |       | 50,500                                                       |       | 28,173                    |       | 0                          |       | 0                                        |       | 78,673         |       |
| Jeffrey A. Sonnenfeld |       | 59,500                                                       |       | 40,026                    |       | 0                          |       | 0                                        |       | 99,526         |       |
| Daniel J. Sullivan    |       | 117,500                                                      |       | 50,592                    |       | 0                          |       | 0                                        |       | 168,092        |       |

 

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(1)                                 This columnreports the amount of cash compensation earned in 2008 for board and committeeservice. Fees for Mr. Lavington include $531,786 earned during 2008 withrespect to his assumption of additional oversight duties at the request of ourboard, for further detail about Mr. Lavington’s additional board fees, see“Mr. Lavington’s 2008 Compensation and Additional Board Fees.”

(2)                                 This columnrepresents the dollar amount recognized for financial statement reportingpurposes with respect to the 2008 fiscal year based upon the grant date fairvalue of the restricted stock and the vesting period. Restricted stock grantedto directors in 2007 and 2008 vest over a three year period with 50% of suchshares vesting on the first anniversary date of the award and 25% vesting eachon the second and third anniversary dates. No restricted stock was granted todirectors prior to 2007. The grant date fair value for the 2007 restrictedstock grants was $61,571 for Messrs. Lavington, Beitzel, Daoust, Kagan,Katz and Sonnenfeld. The grant date fair value for Mr. Bourell was $90,564and for Mr. Sullivan was $92,347. The grant date fair value for the 2008restricted stock grants was $61,406 for Messrs. Lavington, Beitzel,Bourell, Daoust, Kagan, Katz, Sonnenfeld and Sullivan. The grant date fairvalue for Mr. Orr was $91,650. The following directors have outstandingrestricted stock at the 2008 fiscal year-end: Messrs. Lavington, Beitzel,Daoust, Kagan, Katz and Sonnenfeld (11,618), Mr. Bourell (12,093), Mr. Sullivan(12,401) and Mr. Orr (15,000).

 

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(3)                                 This columnrepresents the dollar amount recognized for financial statement reportingpurposes with respect to the 2008 fiscal year for the fair value of stockoptions granted to the directors. All stock options granted to directors before2007 have been fully expensed prior to the 2008 fiscal year. No stock optionswere granted to directors during 2007 or 2008. The following directors haveoutstanding option awards at 2008 fiscal year-end: Mr. Beitzel (6,719), Mr. Daoust(10,000), Mr. Kagan (37,005), Mr. Katz (23,671), Mr. Sonnenfeld(13,671) and Mr. Lavington (10,000).

(4)                                 This columnrepresents a temporary housing allowance and an automobile allowance receivedby Mr. Lavington in connection with additional oversight duties asdescribed below under “Mr. Lavington’s 2008 Compensation and AdditionalBoard Fees.”

 

**Mr. Lavington’s2008 Compensation and Additional Board Fees**

 

In August of 2007, ourboard asked Mr. Lavington to provide additional services in his capacityas a board member.  After the resignationof our former CEO and Chairman of the Board, Erik Vonk, in October 2007,our board appointed Mr. Lavington as Chairman of the Board and announcedthat Mr. Lavington was our board’s choice for appointment as the Company’sCEO, subject to his obtaining all necessary immigration approvals. During theperiod in which Mr. Lavington was awaiting the immigration approvals, ourboard requested that Mr. Lavington assume greater responsibility foroversight of the day-to-day management of the Company on our board’s behalf.

 

Based on Mr. Lavington’sassumption of additional oversight duties in his capacity as a board member atthe request of our board, and, in recognition of the greater time commitmentundertaken by Mr. Lavington, as well as his relinquished employment andconsulting opportunities, our board determined that he should be paidadditional board fees.  Mr. Lavingtonwas paid additional board fees until September 15, 2008, when he receivedwork authorization and become CEO.

 

In determining the amount ofboard fees to be paid to Mr. Lavington, our board took into account thenature and scope of the oversight duties he assumed on behalf of our board.Additionally, our board factored in the amount that the Company would haveexpected to pay to an executive or other board member to perform day-to-dayoversight duties of the nature being provided by Mr. Lavington until September 15,2008.

 

As a result of its review ofthe foregoing factors, our board determined that Mr. Lavington wasentitled to the following additional board fees to compensate him for hisassumption of additional oversight duties in his capacity as a board member andon behalf of our board:

 

·                  an additionalboard fee of $59,166 per month beginning January 1, 2008, and continuingat our board’s discretion for so long as Mr. Lavington performs theoversight duties as a board member or until he became eligible for employmentas the CEO;

·                  an automobileallowance of $1,667 per month beginning November 1, 2007 and continuing atour board’s discretion for so long as Mr. Lavington performs the oversightduties as a board member or until he became eligible for employment as our CEO;and

·                  a temporary housingallowance of $3,285 per month from November 1, 2007 through March 31,2008.

 

In addition, our boardreimbursed or agreed to pay attorney’s fees of $23,820 incurred by Mr. Lavingtonas a result of applying for and obtaining his work authorization and gross-upfor related taxes equal to $13,662. Please see All OtherCompensation Table for 2008**,**above.

 

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**ITEM 12 — *SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDERMATTERS***

 

**Security Ownership of Directors, Management andPrincipal Shareholders**

 

At the close of business on April 13, 2009, we had 24,725,422shares of common stock issued and outstanding and entitled to vote at our 2009special shareholders meeting. The following table sets forth information aboutthe beneficial ownership of our common stock as of April 13, 2009 by: (1) eachof our directors; (2) each of the named executive officers identified inthe 2008 Summary Compensation Table; (3) the beneficial owners of morethan 5% of our outstanding common stock; and (4) our directors andexecutive officers as a group.  Under the rules ofthe SEC, you are deemed to be a beneficial owner of shares if you have or sharethe power to vote or direct the voting of the shares or the power to dispose ofor direct the disposition of the shares. You are also deemed to be a beneficialowner of shares if you have the right to acquire beneficial ownership of theshares within 60 days of April 13, 2009. Accordingly, morethan one person may be deemed to be a beneficial owner of the same shares.Unless otherwise indicated by footnote, the persons named in the table havesole voting and investment power with respect to the shares beneficially owned.Unless otherwise noted, the address of each person listed in the table is: c/o 9000 Town Center Parkway, Bradenton,Florida 34202.

 
| **Directors and Named Executives**         | ** ** | **No. of Shares** | ** ** | **Percent (1)** | ** ** |
|--------------------------------------------|------------|-------------------|------------|-----------------|------------|
|                                       |       |              |       |            |       |   |
| Michael J. Lavington                       |       | 23,185            | (2)        |            | *          |   |   |
| *Chairman, Chief Executive Officer*        |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Garry J. Welsh                             |       | 96,008            | (3)        |            | *          |   |   |
| *SVP, Chief Financial Officer*             |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| James E. Hardee                            |       | 90,750            | (4)        |            | *          |   |   |
| *SVP, Chief Sales & Marketing Officer* |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Paul E. Benz                               |       | 107,305           | (5)        |            | *          |   |   |
| *SVP, Chief Information Officer*           |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Edwin E. Hightower, Jr.                    |       | 74,982            | (6)        |            | *          |   |   |
| *SVP, Chief Legal Officer*                 |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Clifford M. Sladnick                       |       | 0                 | (7)        |            | *          |   |   |
| *Former SVP, Chief Administrative Officer* |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| George B. Beitzel                          |       | 45,421            | (8)        |            | *          |   |   |
| *Director*                                 |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Todd F. Bourell                            |       | 12,093            | (9)        |            | *          |   |   |
| *Director*                                 |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Paul R. Daoust                             |       | 28,185            | (10)       |            | *          |   |   |
| *Director*                                 |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Jonathan H. Kagan                          |       | 121,018           | (11)       |            | *          |   |   |
| *Director*                                 |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| David S. Katz                              |       | 36,856            | (12)       |            | *          |   |   |
| *Director*                                 |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| James F. Orr III                           |       | 35,000            | (13)       |            | *          |   |   |
| *Director*                                 |       |              |       |            |       |   |   |
|                                       |       |              |       |            |       |   |   |
| Jeffrey A. Sonnenfeld                      |       | 28,231            | (14)       |            | *          |   |   |
| *Director*                                 |       |              |       |            |       |   |   |

 

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| Daniel J. Sullivan                                                                                     |   | 14,752    | (15)   |   | *      |   |   |
|--------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|--------|--------|--------|
| *Director*                                                                                             |   |      |   |   |   |   |   |
| * *                                                                                               |   |      |   |   |   |   |   |
| **All Directors and Executive  Officers as a Group (14 Persons)**                                      |   | 713,786   | (16)   |   | 2.9    | %      |   |
|                                                                                                   |   |      |   |   |   |   |   |
| **5% Shareholders**                                                                                    |   |      |   |   |   |   |   |
| TriNet  Group, Inc.*1100 San Leandro Blvd.,  Suite 300 San Leandro, CA 94577*                |   | 3,303,419 | (17)   |   | 13.3   | %      |   |
|                                                                                                   |   |      |   |   |   |   |   |
| ValueAct  Capital Partners, LLC*435 Pacific Avenue, 4**th** Floor**San Francisco, CA 94133*       |   | 3,291,326 | (18)   |   | 13.3   | %      |   |
|                                                                                                   |   |      |   |   |   |   |   |
| Barclay’s  Global Investors, N.A.*45 Fremont Street San Francisco, CA 94105*                      |   | 2,262,434 | (19)   |   | 9.2    | %      |   |
|                                                                                                   |   |      |   |   |   |   |   |
| HR  Acquisitions, LLC*c/o General Atlantic Service  Company, LLC 3 Pickwick Plaza Greenwich, CT 06830* |   | 2,211,500 | (20)   |   | 8.9    | %      |   |
|                                                                                                   |   |      |   |   |   |   |   |
| Putnam  Investment Management, LLC*One Post Office Square Boston, MA 02109*                            |   | 1,789,784 | (21)   |   | 7.2    | %      |   |
|                                                                                                   |   |      |   |   |   |   |   |
| Security  Investors, LLC*One Security Benefit Place Topeka, Kansas 66636-0001*                         |   | 1,414,299 | (22)   |   | 5.7    | %      |   |

 

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* Lessthan 1%.

 

(1)                       The percentages havebeen calculated on the basis of 24,725,422 common shares issued and outstanding(including unvested shares of restricted shares) as of April 13, 2009 and,with respect to each of the persons noted in the table above:

·                  the shares subject toexercisable options granted to such person; and

·                  the shares subject torestricted share grants under our equity compensation plans, pursuant to whichsuch person has the 

power to vote or direct the votingof the shares.

Percentagesshown only for those persons whose beneficial ownership of shares exceeds onepercent of the common shares outstanding or deemed to be outstanding for thiscalculation.

(2)                       Includes 11,618restricted shares; 10,000 shares which Mr. Lavington has the right toacquire through currently exercisable options; and 1,567 shares that he ownsdirectly.

(3)                       Includes 78,250restricted shares; 15,000 shares which Mr. Welsh has the right to acquirethrough currently exercisable options; and 2,758 shares that he owns directly.

(4)                       Includes 76,375restricted shares; 11,250 shares which Mr. Hardee has the right to acquirethrough currently exercisable options; and 3,125 shares that he owns directly.

(5)                       Includes 73,875restricted shares; 31,250 shares which Mr. Benz has the right to acquirethrough currently exercisable options and 2,180 shares that he owns directly.

(6)                       Includes 67,357restricted shares; 6,837 shares which Mr. Hightower has the right toacquire through currently exercisable options; and 788 shares that he ownsdirectly.

(7)                       Mr. Sladnick resigned as SVP, chief administrative officer effective July 31,2008.

(8)                       Includes 11,618restricted shares; 6,719 shares which Mr. Beitzel has the right to acquirethrough currently exercisable options; and 27,084 shares that he owns directly.

(9)                       Represents 12,093restricted shares.

(10)                 Includes 11,618restricted shares; 10,000 shares which Mr. Daoust has the right to acquirethrough currently exercisable options; and 6,567 shares that he owns directly.

(11)                 Includes 11,618restricted shares; 37,005 shares which Mr. Kagan has the right to acquirethrough currently exercisable options; an aggregate of 330 shares held by Mr. Kagan’sminor children; and also 72,065 shares that he 

 

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owns directly.

(12)                 Includes 11,618restricted shares; 23,671 shares which Mr. Katz has the right to acquirethrough currently exercisable options; and 1,567 shares that he owns directly.

(13)                 Includes 15,000restricted shares and 20,000 shares which Mr. Orr owns directly.

(14)                 Includes 11,618restricted shares; 13,671 shares which Mr. Sonnenfeld has the right toacquire through currently exercisable options; and 2,942 shares that he ownsdirectly.

(15)                 Includes 12,401restricted shares; and 2,351 shares that Mr. Sullivan owns directly.

(16)                 Please refer to notes 2through 15.

(17)                 The amount shown andthe following information is based on a Schedule 13D filed with the SEC on March 6,2009 by TriNet.  As a result of the voting agreement withValueAct that was entered into concurrently with the signing of the MergerAgreement, TriNet may be deemed to be the beneficial owner of approximately13.3% of our issued and outstanding shares of common stock. TriNet also may bedeemed to have shared voting power with respect to the foregoing shares withrespect to those matters described above. However, TriNet is not entitled toany rights as a shareholder of Gevity with respect to the foregoing shares, andhas disclaimed beneficial ownership of such shares.

(18)                 The amount shown andthe following information is based on a Schedule 13D/A jointly filed with theSEC on March 6, 2009****by: (a) ValueActCapital Master Fund L.P. (“ValueAct Master Fund”); (b) ValueAct CapitalMaster Fund III L.P. (“ValueAct Master Fund III”); (c) VA Partners I, LLC(“VA Partners I”); (d) VA Partners III, LLC (“VA Partners III”); (e) ValueActCapital Management, L.P. (“ValueAct Management L.P.”); (f) ValueActCapital Management, LLC (“ValueAct Management LLC”); (g) ValueActHoldings, L.P. (“ValueAct Holdings”); and (h) ValueAct Holdings GP, LLC (“ValueActHoldings GP”).  As of the date of theSchedule 13D/A: (1) ValueAct Master Fund was the beneficial owner of2,985,426 shares of our common stock, which shares may also be deemed to bebeneficially owned by VA Partners I; (2) ValueAct Master Fund III was thebeneficial owner of 305,900 shares of our common stock, which shares may alsobe deemed to be beneficially owned by VA Partners III; and (3) ValueActManagement L.P., ValueAct Management LLC, ValueAct Holdings and ValueActHoldings GP may each be deemed to be the beneficial owner of an aggregate of3,291,326 shares of our common stock.

(19)                 The amount shown andthe following information are based on a Schedule 13G filed with the SEC on February 5,2009 by Barclays Global Investors, N.A. Shares beneficially owned by Barclays Global Investors, N.A. are held intrust accounts for the economic benefit of the beneficiaries of those accounts.

(20)                 The amount shown andthe following information is based on a Schedule 13D/A jointly filed with theSEC on March 6, 2009 by General Atlantic, HR Acquisitions, LLC (“HR”),General Atlantic Partners 84, L.P. (“GAP 84”), GapStar, LLC (“GapStar”), GAPCoinvestments III, LLC (“GAPCO III”), GAP Coinvestments IV, LLC (“GAPCO IV”),GAP Coinvestments CDA, L.P. (“CDA”), GAPCO GmbH & Co. KG (“KG”), andGAPCO Management GmbH (“GmbH Management”). GAP 84, GapStar, GAPCO III, GAPCO IV, CDA and KG are the sole members ofHR.  General Atlantic is the generalpartner of each of GAP 84 and CDA. General Atlantic is also the sole member of GapStar.  The managing members of GAPCO III and GAPCOIV are managing directors of General Atlantic (“GA Managing Directors”).  GmbH Management is the general partner ofKG.  There are 26 GA ManagingDirectors.  The GA Managing Directorsmake voting and investment decisions with respect to securities held byKG.  General Atlantic, HR, GAP 84, GapStar,GAPCO III, GAPCO IV, CDA, KG and GmbH Management are a “group,” as defined in Rule 13d-5of the General Rules and Regulations promulgated under the Exchange Actand may be deemed to own beneficially an aggregate of 2,211,500 shares of ourcommon stock.  The GA Managing Directorsare:  Steven A. Denning, William E. Ford,John Bernstein, H. Raymond Bingham, Peter L. Bloom, Mark F. Dzialga, William O.Grabe, Abhay Havaldar, David C. Hodgson, Rene M. Kern, Jonathan Korngold,Christopher G. Lanning, Jeff X. Leng, Anton J. Levy, Mark F. McMorris, ThomasJ. Murphy, Matthew Nimetz, Fernando Oliveira, Ranjit Pandit, Andrew C. Pearson,Raul R. Rai, David A. Rosenstein,  SunishSharma, Tom C. Tinsley, Philip P. Trahanas and Florian P. Wendelstadt.  Each of these individuals disclaims ownershipof such shares owned by General Atlantic except to the extent he or she has apecuniary interest therein. Other than their interest in General Atlantic,these individuals are not affiliated with us or our management.  General Atlantic, HR, GAP 84, GapStar, GAPCOIII, GAPCO IV and CDO are located at c/o General Atlantic Service Company, LLC,3 Pickwick Plaza, Greenwich, Connecticut 06830. KG and GmbH Management are located at c/o General Atlantic GmbH,Koenigsallee 62, 40212 Duesseldorf, Germany.

(21)                 The amount shown andthe following information is based on a Schedule 13G/A filed with the SEC on February 13,2009 by Putnam, LLC, doing business as Putnam Investments, on behalf of itselfand its investment advisors and subsidiaries: (a) Putnam InvestmentManagement, LLC, the beneficial owner of 1,054,023 shares of our common stock;and (b) The Putnam Advisory Company, LLC, the beneficial owner of 735,761shares of our common stock.  Sharesbeneficially owned by Putnam Investments are held in trust accounts for theeconomic benefit of the beneficiaries of those accounts.

(22)                 The amount shown andthe following information are based on a Schedule 13G filed with the SEC on February 13,2009 by Security Investors, L.L.C.

 

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**SecuritiesAuthorized for Issuance under our Equity Compensation Plans**

 

The following tablesummarizes information about our equity compensation plans by type as of December 31,2008.

 
| **Plan Category**                                     | ** ** | **Number of securities to be   issued upon exercise of  outstanding options,  warrants and rights** | ** ** | **Weighted-average exercise  price of outstanding  options, warrants and rights  ($)** | ** ** | **Number of securities  remaining available for  future issuance under  equity compensation plans** | ** ** |
|------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity compensation plans approved by security holders     |       | 1,009,417                                                                                                                                                  |       |                                                                                                                 |       | 15.25                                                                                                                                       |       |   | 703,958 |   |   |
| Equity compensation plans not approved by security holders |       | 0                                                                                                                                                          |       |                                                                                                                 | N/A        |                                                                                                                                        |       | 0 |   |   |
| **Total**                                                  | ** ** | **1,009,417**                                                                                                                                              | ** ** | ** **                                                                                                           | ** ** | **15.25**                                                                                                                                   | ** ** | ** ** | **703,958** | ** ** | ** ** |

 

We have outstanding equity awards under thefollowing plans:

 

*2005Equity Incentive Plan. *In May 2005,our shareholders approved the Plan. The Plan provides for various equityincentives, including non-qualified options, to be granted to our keyemployees, officers, directors, certain contractors and other service providersthat we utilize. Originally, under the Plan, a maximum of 2,000,000 shares ofour common stock were authorized for issuance. The maximum aggregate number ofshares of our common stock subject to stock awards, stock appreciation rights,dividend equivalent rights, phantom shares and performance unit awards that maybe settled in stock and granted under the Plan may not exceed 400,000.  In May 2008, Amendment No. 1 to theGevity HR, Inc. 2005 Equity Incentive Plan (“Amendment”) was approved byshareholders.  The Amendment allows thefull pool of shares available for issuance under the Plan to be issued in theform of options, stock awards, stock appreciation rights, dividend equivalentrights, phantom shares and performance units (collectively “Stock Incentive”)and eliminated the 400,000 share limit. Generally, after the 400,000 share limit is exceeded, each StockIncentive granted under the Plan other than as an option or stock appreciationright shall reduce the 2,000,000 shares of common stock reserved for issuanceunder the Plan by three shares for every one share subject to such StockIncentive.* *Grants of options and restricted stock under the Plan areapproved by the Committee. Options granted under the Plan generally have avesting period of four years for officers and key employees, generally vest inequal quarterly installments over a one year period for non-employee directorsand may not be exercised more than 10 years from the grant date. Under thePlan, the exercise price of each option will equal the market price of ourcommon stock at the close of trading on the date of grant or previous close oftrading if the market is closed on the date of grant.  Restricted stock granted under the Plangenerally has a vesting period of three or four years for officers and keyemployees.  Restricted stock granted tonon-employee directors vests over a three year period. During 2008, the firstrestricted stock awards with performance based vesting conditions were grantedto certain of our officers.  These sharesvest upon the attainment of certain stock price goals over a four year period.

 

*2002 StockIncentive Plan.*Our 2002 Stock Incentive Plan provided for variousequity incentives, including non-qualified options, to be granted to our keyemployees, officers, directors, certain contractors and other service providersthat we utilize. Under the 2002 plan, 2,000,000 shares of our common stock wereauthorized for issuance. All options were granted at fair market value on thedate of grant. Options granted under the 2002 plan generally have a vestingperiod of four years for officers and key employees, generally were immediatelyvested for non-employee directors and may not be exercised more than10 years from the grant date. Restricted stock granted under the 2002 plangenerally has a vesting period of four years for officers and key employees. Asof the date of approval of the Plan, no further options or other equity awardswere made under our 2002 plan.

 

*1997 StockIncentive Plan.* Our 1997 Stock Incentive Plan provided for variousequity incentives, including options, to be granted to key employees, officersand directors. Initially, 2,500,000 shares of common stock were authorized forissuance under the 1997 plan. In May 2000, our shareholders approved anamendment to the 1997 plan that increased the number of shares reserved forissuance under the 1997 plan to 4,500,000 shares. All options were granted atfair market value on the date of grant. Options granted under the 1997 plangenerally have a vesting period of four years for officers and key employeesand generally were immediately vested for non-employee directors. Optionsgenerally may not be exercised more than 10 years from the grant date. Asof the date of approval of the Plan, no further options or other equity awardswere made under our 1997 plan.

 

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**ITEM 13 – *CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE***

 

**“Independence” Determination**

 

Our board of directors believes that thereshould be a substantial majority of independent directors on our board and thatit is useful and appropriate to have our chief executive officer serve as adirector. Except for Michael Lavington, each of our directors was determined tobe “independent” in accordance with applicable corporate governance rules underthe Exchange Act and NASDAQ. The NASDAQ independence definition includes aseries of objective tests, such as whether the director is an employee of thecompany or has engaged in various types of business dealings with the company.In addition, as required by NASDAQ Marketplace Rules, our board and thenominating/corporate governance committee each made a subjective determinationas to whether each director has any relationships which, in their opinion,would interfere with the exercise of independent judgment in carrying out theresponsibilities of a director. In making these determinations, our board andthe nominating/corporate governance committee reviewed and discussedinformation provided by each director and the Company with regard to eachdirector’s business and personal activities as they may relate to the Companyand management.

 

Based on the foregoing, each of the membersof the audit committee, the nominating/corporate governance committee, and thecompensation committee meets the independence requirements, as established byNASDAQ.  In addition, (i) themembers of the audit committee meet the applicable standards for auditcommittee members established by the SEC and NASDAQ and (ii) the membersof the compensation committee meet the applicable standards under the Code andthe Exchange Act.

 

**Certain Related Person Transactions**

 

In 2008, Gevity utilized HighRoads, Inc.for the provision of health and welfare benefits-related advisory services inthe ordinary course of business, which are considered arms-length in nature.Paul Daoust, one of our directors, served as chairman and chief executiveofficer of HighRoads, Inc. until December 18, 2008.  The Company paid HighRoads, Inc.approximately $645,000 for such advisory services in 2008. In the opinion ofmanagement, the terms of the health and welfare benefits-related advisoryservices arrangement are fair and reasonable and as favorable to the Company asthose that could be obtained from unrelated third parties.

 

The audit committee has adopted a writtenpolicy concerning the review, approval or ratification of all transactionsrequired to be disclosed under Item 404 of Regulation S-K under theExchange Act. This policy covers all related person transactions required to bedisclosed under such regulation as well as all material conflict of interesttransactions as defined by relevant state law and the rules andregulations of NASDAQ that are applicable to us.

 

This policy requires that all suchtransactions be identified by management and disclosed to the audit committeefor review and, if required, approval or ratification. At least annually, eachdirector and executive officer completes a detailed questionnaire that asksquestions about any business relationship that may give rise to a conflict ofinterest and all transactions in which Gevity is involved and in which theexecutive officer, a director or a related person has a direct or indirectmaterial interest. We also conduct a review, at least annually, of ourfinancial systems to determine whether a director, or a company employing adirector, engaged in transactions with us during the fiscal year.

 

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**ITEM 14 — *PRINCIPAL ACCOUNTING FEES AND SERVICES***

 

**Audit Committee Pre-Approval**

 

The audit committee has established a policyregarding pre-approval of all audit and permissible non-audit services providedby the independent auditor. In accordance with its charter and theSarbanes-Oxley Act of 2002 (the “Act”), each year the audit committee approvesthe terms of the independent auditor’s engagement for the following year. Thisapproval requirement is subject to applicable *deminimis* exceptions allowed by that Act. In making its pre-approvaldetermination, the audit committee is required to consider whether providingthe non-audit services is compatible with maintaining the auditors’independence. The audit committee may delegate this pre-approval authority toone or more audit committee members. However, if the authority is delegated,the member or members to whom the authority is delegated must present a reportof their actions at the next scheduled audit committee meeting.

 

**Determination of Accountant Independence**

 

The audit committee considered the provisionof non-audit services by Deloitte & Touche LLP and determinedthat the provision of such services was not incompatible with maintaining theirindependence.

 

**Fees Paid to Deloitte & Touche LLP**

 
| ** **         | ** ** | **2008 ($)** | ** ** | **2007 ($)** | ** ** |
|--------------------|------------|-------------------|------------|-------------------|------------|
| Audit Fees         |       | 1,158,000         |       | 975,000           |       |
| Audit-Related Fees |       | 79,000            |       | 141,000           |       |
| Tax Fees           |       | 14,000            |       | 22,000            |       |
| All Other Fees     |       | 29,000            |       | —            |       |
| Total*             |       | 1,280,000         |       | 1,138,000         |       |

 

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*                                         The amount disclosed for2008 represents estimates of total fees to be paid to Deloitte &Touche LLP with respect to 2008. The amount disclosed for 2007 reflectsactual fees paid to Deloitte & Touche LLP with respect to 2007.

 

*Audit Fees.*  This category includes the audit of Gevity’sannual financial statements, review of financial statements included in each ofGevity’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K,the audit of our internal control over financial reporting and theeffectiveness thereof in connection with Section 404 of the Sarbanes-OxleyAct of 2002 and services that are normally provided by the independent auditorsin connection with statutory and regulatory filings or engagements for thosefiscal years.

 

*Audit-Related Fees.*  This category consists of assurance andrelated services provided by Deloitte & Touche LLP that arereasonably related to the performance of the audit or review of Gevity’sfinancial statements and are not reported above under “Audit Fees.” Theservices for the fees disclosed under this category include consultationsregarding financial reporting and related matters.

 

*Tax Fees.*  This category consists of professionalservices rendered by Deloitte & Touche LLP primarily in connectionwith Gevity’s tax compliance activities, including the review of tax returns,tax planning and technical advice.

 

*All Other Fees.*  This category consists of services performedprimarily in connection with the proposed Merger Agreement.

 

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**PART IV.**

** **

**ITEM 15.*  EXHIBITS,FINANCIAL STATEMENT SCHEDULES***

 
| 31.1   |   | Certification  of Michael J. Lavington, as chief executive officer, pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                 |
| 31.2   |   | Certification  of Garry J. Welsh, as chief financial officer, pursuant to Section 302  of the Sarbanes-Oxley Act of 2002.       |
|   |   |                                                                                                                                 |
| 32     |   | Certification  furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                             |

 

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**SIGNATURES**

** **

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, Gevity HR, Inc. has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized.

 
|                       | GEVITY HR, INC.                      |
|----------------------------|--------------------------------------|
|                       |                                 |
| Dated: April 30, 2009 | /s/  Michael J.  Lavington |
|                       | Michael J. Lavington                 |
|                       | Chairman of the Board                |
|                       | Chief Executive Officer              |
|                       | (Principal Executive  Officer)       |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

 
| Dated: April 30, 2009 | /s/  Michael J.  Lavington          |
|----------------------------|-----------------------------------------------|
|                       | Michael J. Lavington                          |
|                       | Chairman of the Board                         |
|                       | Chief Executive Officer                       |
|                       | (Principal Executive  Officer)                |
|                       |                                          |
| Dated: April 30, 2009 | /s/  Garry J.  Welsh                |
|                       | Garry J. Welsh                                |
|                       | Chief Financial Officer                       |
|                       | (Principal Financial and  Accounting Officer) |
|                       |                                          |
| Dated: April 30, 2009 | /s/  George  B. Beitzel             |
|                       | George  B. Beitzel                            |
|                       | Director                                      |
|                       |                                          |
| Dated: April 30, 2009 | /s/  Todd F.  Bourell               |
|                       | Todd F. Bourell                               |
|                       | Director                                      |
|                       |                                          |
| Dated: April 30, 2009 | /s/  Paul R.  Daoust                |
|                       | Paul R. Daoust                                |
|                       | Director                                      |
|                       |                                          |
| Dated: April 30, 2009 | /s/  Jonathan H.  Kagan             |
|                       | Jonathan H. Kagan                             |
|                       | Director                                      |
|                       |                                          |
| Dated: April 30, 2009 | /s/  David  S. Katz                 |
|                       | David  S. Katz                                |
|                       | Director                                      |
|                       |                                          |
| Dated: April 30, 2009 | /s/  James F.  Orr, III        |
|                       | James F. Orr, III                        |
|                       | Director                                      |
|                       |                                          |
| Dated: April 30, 2009 | /s/  Jeffrey  A. Sonnenfeld         |
|                       | Jeffrey  A. Sonnenfeld                        |
|                       | Director                                      |
|                       |                                          |
| Dated: April 30, 2009 | /s/  Daniel J.  Sullivan            |
|                       | Daniel J. Sullivan                            |
|                       | Director                                      |

 

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EXHIBIT INDEX

 
| 31.1   |   | Certification  of Michael J. Lavington, as chief executive officer, pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                 |
| 31.2   |   | Certification  of Garry J. Welsh, as chief financial officer, pursuant to Section 302  of the Sarbanes-Oxley Act of 2002.       |
|   |   |                                                                                                                                 |
| 32     |   | Certification  furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                             |

 

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