UNITED STATED SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A INFORMATION

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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G&K SERVICES, INC.

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G&K SERVICES, INC.
5995 Opus Parkway
Minnetonka, Minnesota 55343 

Notice of Annual Meeting of Shareholders Thursday, November 15, 2007

To the Shareholders of G&K Services, Inc.:

Please take notice that the Annual Meeting of Shareholders of G&K Services, Inc. will be held, pursuant to due call by our Board of Directors, at the Marquette Hotel, 710 Marquette Avenue, Universe Meeting Room, 50th Floor, IDS Building, Minneapolis, Minnesota, on Thursday, November 15, 2007, at 10:00 a.m. Central Standard Time, or at any adjournment or adjournments thereof, for the purpose of considering and taking appropriate action with respect to the following:

	1.		To elect three “Class III” directors to serve for terms of three years;
	2.		To ratify the appointment of Ernst & Young LLP, Independent Registered Public Accounting Firm, as our independent auditors for fiscal 2008; and
	3.		To transact any other business as may properly come before the meeting or any adjournments thereof.

Pursuant to action of the Board of Directors, shareholders of record on September 18, 2007 will be entitled to vote at the meeting or any adjournments thereof.

A proxy for the meeting is enclosed. You are requested to complete and sign the proxy, which is solicited by the Board of Directors, and mail it promptly in the enclosed envelope.

By Order of the Board of Directors
G&K Services, Inc.

/s/ Richard L. Marcantonio
Richard L. Marcantonio
Chairman and Chief Executive Officer

October 12, 2007

Proxy Statement of G&K Services, Inc.

Annual Meeting of Shareholders to be Held Thursday, November 15, 2007

Voting by Proxy and Revocation of Proxies

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of G&K Services, Inc. to be used at the annual meeting of our shareholders to be held on Thursday, November 15, 2007, at 10:00 a.m. Central Standard Time, at the Marquette Hotel, 710 Marquette Avenue, Universe Meeting Room, 50th Floor, IDS Building, Minneapolis, Minnesota, or at any adjournment or adjournments thereof, for the purpose of considering and taking appropriate action with respect to the following:

	1.		To elect three “Class III” directors to serve for terms of three years;
	2.		To ratify the appointment of Ernst & Young LLP, Independent Registered Public Accounting Firm, as our independent auditors for fiscal 2008; and
	3.		To transact any other business as may properly come before the meeting or any adjournments thereof.

The approximate date on which this proxy statement and the accompanying proxy were first sent or given to shareholders was October 12, 2007.

Each shareholder who signs and returns a proxy in the form enclosed with this proxy statement may revoke the same at any time prior to its use and prior to the annual meeting by giving notice of such revocation to the company in writing, in open meeting or by executing and delivering a new proxy to our Corporate Secretary. Unless so revoked, the shares represented by each proxy will be voted at the annual meeting and at any adjournments thereof. Mere presence at the annual meeting by a shareholder who has signed a proxy does not, alone, revoke that proxy; revocation must be announced by the shareholder at the time of the meeting. All shares which are entitled to vote and are represented at the annual meeting by properly executed proxies received prior to or at the annual meeting, and not revoked, will be voted at the annual meeting and any adjournments thereof.

Voting Procedures

The company has one class of voting securities outstanding: Class A Common Stock, $0.50 par value per share, of which 21,477,403 shares were outstanding as of the close of business on September 18, 2007, the record date for the annual meeting. Each share of Class A Common Stock is entitled to one vote on each matter put to a vote of shareholders. Our Class A Common Stock is referred to in this proxy statement as common stock. Only shareholders of record at the close of business on the record date for the annual meeting will be entitled to vote at the annual meeting or any adjournments thereof. A quorum, consisting of the holders of a majority of the stock issued and outstanding and entitled to vote at the annual meeting, and the presence of such shareholders, is requisite for the transaction of business at the annual meeting. Such quorum must be present, either in person or represented by proxy, for the transaction of business at the annual meeting, except as otherwise required by law, our Amended and Restated Articles of Incorporation or our Amended and Restated Bylaws.

All shares entitled to vote and represented by properly executed proxies received prior to the annual meeting, and not revoked, will be voted as instructed on those proxies. If no instructions are indicated, the shares will be voted as recommended by the Board of Directors. If any director nominee should withdraw or otherwise become unavailable for reasons not presently known, the proxies which would have otherwise been voted for that director nominee may be voted for a substitute director nominee selected by our Board of Directors.

A plurality of votes cast is required for the election of each director in Proposal No. 1. Each other proposal requires the affirmative vote of the holders of the greater of (i) a majority of the voting power of shares present and entitled to vote on that item of business, or (ii) a majority of the voting power of the minimum number of shares entitled to vote that would constitute a quorum for the transaction of business at the annual meeting.

A shareholder who abstains with respect to any proposal is considered to be present and entitled to vote on that proposal, and is effectively casting a negative vote. A shareholder (including a broker) who does not give authority to a proxy to vote, or withholds authority to vote, on any proposal shall not be considered present and entitled to vote on that proposal.

The Board of Directors unanimously recommends that you vote “FOR” the election of each director nominee named in this proxy statement and “FOR” the ratification of Ernst & Young LLP’s appointment as our independent accountant for fiscal 2008.

PROPOSAL NUMBER 1:

Election of Class III Directors

Pursuant to our articles of incorporation, our management and business affairs are vested in a Board of Directors comprised of not less than three and not more than 12 directors and our bylaws state that the number of directors is established by resolution of the Board of Directors. Presently, our Board of Directors consists of nine directors. Pursuant to our articles of incorporation, these directors are divided into three classes, designated as Class I, Class II and Class III, respectively, and are elected to serve for staggered three-year terms of office that expire in successive years. The current terms of office for the directors in Class I, Class II and Class III expire, respectively, at the 2008, 2009 and 2007 annual shareholders’ meetings.

Messrs. Bronson, Fortun, and Mrozek, each of whom currently serves as a Class III director, have been nominated by the Board of Directors to serve as our Class III directors for a three-year term commencing immediately following the annual meeting and expiring at our 2010 annual shareholders’ meeting, or until his or her successor is elected and qualified. If elected, each nominee has consented to serve as a Class III director.

Set forth below is information regarding the three individuals nominated for election to our Board of Directors as Class III directors, which includes information furnished by them as to their principal occupations for the last five years, certain other directorships held by them, and their ages as of the date of this Proxy Statement.

Name (and Age) of		Principal Occupation, Past Five Years		Director
Director/ Nominee		Business Experience and Directorships in Public Companies		Since
Class III Nominees:
John S. Bronson (59)		Mr. Bronson is a director of the company and serves as a member of the Compensation and Corporate Governance Committees of our Board of Directors. Mr. Bronson was Senior Vice President, Human Resources from 1999 to 2003 for Williams-Sonoma, Inc., a specialty retailer of home furnishings. Prior to his employment with Williams-Sonoma, Inc., Mr. Bronson held several senior human resource-related management positions with PEPSICO, from 1979 to 1999, most recently as its Executive Vice President, Human Resources Worldwide for Pepsi-Cola Worldwide.			2004
Wayne M. Fortun (58)		Mr. Fortun is a director of the company, and serves as Chair of the Compensation Committee of our Board of Directors. Mr. Fortun was elected director, President and Chief Operating Officer of Hutchinson Technology, Inc., a world leader in precision manufacturing of suspension assemblies for disk drives, in 1983 and was appointed its Chief Executive Officer in May 1996. Mr. Fortun also serves as a director of C.H. Robinson Worldwide, Inc., a global provider of multimodal transportation services and logistics solutions.			1994
Ernest J. Mrozek (54)		Mr. Mrozek is a director of the company and serves as a member of the Audit Committee of our Board of Directors. Mr. Mrozek is also one of our Audit Committee Financial Experts Mr. Mrozek has served as Vice Chairman of The ServiceMaster Company, a residential and commercial service company, since November 2006. Mr. Mrozek previously served as ServiceMaster’s President and Chief Financial Officer since January 2004. Mr. Mrozek joined ServiceMaster in 1987 and has held various senior positions in general management, operations and finance. Prior to joining ServiceMaster, Mr. Mrozek spent 11 years with Arthur Andersen & Co.			2005

Directors and Executive Officers of the Company

Set forth below is information regarding our executive officers and the balance of our directors, which includes information furnished by them as to their principal occupations for the last five years, certain other directorships held by them, and their ages as of the date of this Proxy Statement.

												Director
Name		Age				Title		Since				Term Expires
Richard L. Marcantonio			57			Chairman of the Board and Chief Executive Officer and Director (Class II)			2002				2009
Jeffrey L. Wright			45			Senior Vice President and Chief Financial Officer			1999				—
David F. Fisher			58			Vice President, General Counsel and Corporate Secretary			2004				—
Robert G. Wood			59			President, G&K Services Canada, Inc.			1998				—
David M. Miller			51			President, U.S. Rental Operations			2005				—
Douglas A. Milroy			48			President, Direct Purchase and Business Development			2006				—
Thomas J. Dietz			43			Vice President and Controller			2006				—
Michael G. Allen			69			Director (Class I)			2001				2008
Paul Baszucki			67			Director (Class II)			1994				2009
John S. Bronson			59			Director (Class III)			2004				2007
J. Patrick Doyle			44			Director (Class I)			2005				2008
Wayne M. Fortun			58			Director (Class III)			1994				2007
Ernest J. Mrozek			54			Director (Class III)			2005				2007
M. Lenny Pippin			60			Presiding Director (Class I)			2001				2008
Alice M. Richter			54			Director (Class II)			2003				2009

Richard L. Marcantonio – Mr. Marcantonio has served as our Chairman of the Board and Chief Executive Officer since November 10, 2005. Prior thereto, Mr. Marcantonio was our President and Chief Executive Officer since January 1, 2004, and our President and Chief Operating Officer since July 15, 2002. Mr. Marcantonio has served as a director of the company since November 6, 2003. Prior to joining the company, Mr. Marcantonio served as President of the Industrial and Service Sectors at Ecolab, Inc., a leading global developer and marketer of cleaning and maintenance products, from March 2002 until July 15, 2002. Mr. Marcantonio served as Senior and/or Executive Vice President of Ecolab’s industrial group from March 1997 until December 2000, and served as Executive Vice President of Ecolab’s Industrial and Service Sectors from January 2001 until March 2002. Prior to his employment at Ecolab, Mr. Marcantonio served in senior management, sales and marketing positions at Keebler Company, a subsidiary of United Biscuits (Holdings) plc. Mr. Marcantonio also served as President and Chief Executive Officer of Specialty Brands, another subsidiary of United Biscuits (Holdings) plc. Mr. Marcantonio serves as a director and member of the Audit Committee of the H.B. Fuller Company, a worldwide manufacturer of adhesives, sealants, coatings, paints and other specialty chemicals.

Jeffrey L. Wright – Mr. Wright has served as our Senior Vice President since January 2004 and as our Chief Financial Officer since 1999. Mr. Wright was our Secretary from February 1999 until May 2004, and served as our Treasurer from February 1999 until November 2001. Mr. Wright was employed with BMC Industries, Inc. from 1996 until the time he joined the company, serving as its Controller from 1996 to 1998 and its Treasurer from 1998 to 1999. From 1993 to 1996, Mr. Wright was Treasurer for Employee Benefit Plans, Inc. From 1984 to 1993, Mr. Wright was employed with Arthur Andersen & Co.

David F. Fisher – Mr. Fisher has served as our Vice President, General Counsel and Corporate Secretary since May 2004. Prior to joining the company, between April 2003 and August 2004, Mr. Fisher served as President and Chief Executive Officer of Internet Destination Sales System, LLC, a privately held software service provider. Between March 1999 until January 2003, Mr. Fisher was the Commissioner of Administration for the State of Minnesota, following which he was a private consultant (between January and April 2003). Mr. Fisher served as Vice President, General Counsel and Corporate Secretary for ADC Telecommunications, Inc., a manufacturer and distributor of communications equipment, from July 1994 until March 1999. Between August 1980 and July 1994, Mr. Fisher was the Vice President and Associate General Counsel of The Pillsbury Company, a food producer and distributor. As announced, Mr. Fisher will be leaving the company effective October 24, 2007.

Robert G. Wood – Mr. Wood has served as President of G&K Services Canada, Inc. and affiliated entities since 1998, and as one of our Regional Vice Presidents between 1997 and 1998. Mr. Wood joined the company in 1995 as a General Manager and served as an Executive Vice President of the company from May 2000 until July 2002. Prior to joining the company, Mr. Wood was Vice President of Marketing and Director of Sales with Livingston International, Inc., where he spent 23 years in a variety of operating, sales, service and marketing positions.

David M. Miller – Mr. Miller has served as our President of U.S. Rental Operations since December 2005. Prior to joining the company, between July 2002 and December 2005, Mr. Miller held various positions with Strategic Equipment and Supply Corp., a provider of foodservice equipment and supplies, including its Corporate Executive Vice President Operations, its President – Northern Region and, most recently, its Chief Operating Officer. Prior to joining Strategic Equipment and Supply, between March 1993 and June 2002, Mr. Miller held various positions with LSG/Sky Chefs, including its Vice President Marketing, its Managing Director, its Vice President Operations and, most recently, its Senior Vice President Operations.

Douglas A. Milroy – Mr. Milroy has served as our President, Direct Purchase and Business Development since November 2006. Mr. Milroy joins us with more than 20 years of global leadership experience in business to business organizations. Most recently, since 2004, Mr. Milroy was managing director of The Milroy Group, a firm focused on the acquisition and management of industrial companies in partnership with other investors. Prior to that, between 2000 and 2004, Mr. Milroy was the Vice President and General Manager – Food and Beverage North America and Water Care for Ecolab Inc. Mr. Milroy has also held senior positions with FMC Corporation and McKinsey & Company. Mr. Milroy holds a Bachelor of Mechanical Engineering degree from the University of Minnesota (1982) and an M.B.A. from the Harvard Business School (1986).

Thomas J. Dietz – Mr. Dietz has served as the company’s Vice President and Controller since July 2006. Mr. Dietz, who also served as the company’s Director of Financial Planning and Analysis between December 2004 and July 2006, has over 20 years of financial reporting and related experience. Prior to joining the company, between 1995 and 2004, Mr. Dietz was employed in various capacities with The St. Paul Companies, which is now known as The St. Paul Travelers Companies, Inc, including most recently as its Assistant Vice President of Financial Planning and Analysis.

Michael G. Allen – Mr. Allen is a director of the company, and serves as a member of the Audit Committee of our Board of Directors. Mr. Allen founded The Michael Allen Company, a Connecticut-based strategy development company, and has served as that company’s Founder and Chair since its inception in 1979. From 1974 to 1979, Mr. Allen served as Vice President of Corporate Strategy for General Electric.

Paul Baszucki – Mr. Baszucki is a director of the company, and serves as a member of the Corporate Governance

Committee of our Board of Directors. Mr. Baszucki served as a director and Chair of the Board of Directors of Norstan, Inc., from May 1997 until December 2004, and as its Chief Executive Officer from 1986 until May 1997, and again from December 1999 to October 2000. Mr. Baszucki also serves as a director and member of the Audit Committee of WSI Industries, Inc., a precision contract machining company primarily servicing the aerospace/avionics industry and recreational vehicles markets. Mr. Baszucki has been a director of WSI Industries since 1988.

John S. Bronson – See information under “Election of Class III Directors” above.

J. Patrick Doyle –Mr. Doyle is a director of the company and serves as a member of the Compensation Committee of our Board of Directors. Mr. Doyle currently serves as President, Domino’s Pizza U.S.A. Mr. Doyle previously served as Executive Vice President of U.S. Store Operations for Domino’s Pizza, Inc., a position he held since October 2004. Mr. Doyle served as Domino’s Executive Vice President of International Operations from May 1999 to October 2004, as Domino’s interim Executive Vice President, Build the Brand, from December 2000 to July 2001 and as Domino’s Senior Vice President of Marketing from the time he joined Domino’s in 1997 until May 1999. Prior to joining Domino’s, Mr. Doyle served as Vice President and General Manager for the U.S. baby food business of Gerber Products Company.

Wayne M. Fortun – See information under “Election of Class III Directors” above.

Ernest J. Mrozek – See information under “Election of Class III Directors” above.

M. Lenny Pippin – Mr. Pippin is the Presiding Director of the company, and serves as the chair of the Corporate Governance Committee of our Board of Directors. Mr. Pippin has served as President and Chief Executive Officer of The Schwan Food Company, a branded frozen-food company, since November 1999. Prior to joining Schwan’s, Mr. Pippin served as President and Chief Executive Officer of Lykes Brothers, Inc., a privately held corporation with operating divisions in the food, agriculture, transportation, energy and insurance industries. Mr. Pippin also serves as a director and member of the Audit Committee of American Tire Distributors, Inc, a nationwide supplier of aftermarket wheels, accessories and automotive service equipment to tire dealers, service repair shops and automotive performance shops

Alice M. Richter – Ms. Richter is a director of the company, and serves as Chair of the Audit Committee of our Board of Directors. Ms. Richter is also one of our Audit Committee Financial Experts. Ms Richter has been retired since June 2001. Prior to her retirement, Ms. Richter was a certified public accountant with KPMG LLP for 26 years. Ms. Richter joined KPMG’s Minneapolis office in 1975 and was admitted to the KPMG partnership in 1987. During her tenure at KPMG, she served as the National Industry Director of KPMG’s U.S. Food and Beverage practice and has also served as a member of the Board of Trustees of the KPMG Foundation from 1991 to 2001. Ms. Richter is also the Chair of the Audit Committee of West Marine, Inc.

Executive Compensation

Compensation Discussion and Analysis

This section describes our compensation program for our executive officers. The discussion focuses on the program and decisions for the 2007 fiscal year. We address why we believe the program is right for our company and our shareholders, and we explain how compensation is determined.

Overview

What person or group is responsible for determining the compensation levels of executive officers?

The Compensation Committee of our Board of Directors, which consists entirely of independent directors and whose membership is determined by the Board of Directors, is responsible for:

	•		approving the design and implementation of our executive compensation program;
	•		regularly reporting on committee actions and recommendations at board meetings;
	•		working with the Audit and Governance Committees of our Board of Directors, as appropriate; and
	•		reviewing named executive officer (NEO) compensation and reporting to the Board of Directors, which is responsible for approving all NEO compensation

The Compensation Committee of our Board of Directors retained the Hay Group as the independent compensation consultant to provide market information, analysis and guidance in the development and assessment of our executive compensation program. The Compensation Committee also works with our human resources and compensation and benefits professionals on the design and implementation of executive compensation programs and employee benefit plans that are of material significance.

Certain of our executive officers also have roles in the compensation process, as follows:

	•		Our Chairman and Chief Executive Officer recommends compensation actions for members of the executive committee and his direct reports and submits those recommendations to the Compensation Committee for review and approval.
	•		In addition, our Chairman and Chief Executive Officer provides his perspective on recommendations provided by the consulting firm hired by the Compensation Committee regarding compensation program design issues.
	•		When requested by the Compensation Committee, other executive officers may also review recommendations on plan design, structure and cost, and provide a perspective to the Compensation

Committee on how these recommendations may affect recruitment, retention and motivation of company employees as well as company financial results.

The Compensation Committee annually reviews NEO compensation. The Compensation Committee considers information provided by its independent compensation consultant, and reviews and recommends compensation actions for NEOs for approval by our full Board of Directors.

Discussion and Analysis

The following discussion and analysis is focused on our NEO compensation program. Our NEOs are our Chairman and Chief Executive Officer, our Chief Financial Officer, and the three most highly compensated executive officers, other than our Chairman and Chief Executive Officer and our Chief Financial Officer, who were serving as executive officers at the end of fiscal 2007. The discussion focuses on the program and decisions for fiscal 2007 and specifically answers the following questions:

1.		What are the objectives of the company’s compensation program?
2.		What is the compensation program designed to reward?
3.		What is each element of compensation?
4.		Why does the company choose to pay each element?
5.		How does the company determine the amount/formula for each element?
6.		How does each element and the company’s decision regarding that element fit into the company’s overall compensation objectives and affect decisions regarding other elements?

What are the objectives of the company’s compensation program?

The objectives of our compensation programs are to provide compensation and benefits plans that enable the company to attract, retain and motivate highly qualified, experienced executives and reward them for performance that creates long-term shareholder value.

What is the compensation program designed to reward?

The compensation program strives to effectively utilize elements of compensation under a total reward philosophy that combines annual and multi-year reward opportunities, which are designed to:

	•		provide competitive levels of compensation that link compensation to the achievement of the company’s annual objectives and long-term goals;
	•		reward for achieving company performance objectives; and
	•		recognize individual initiative and reward strong individual and team performance.

Shareholder value and corporate performance are realized through the company’s ongoing business strategy to:

	•		achieve year-over-year growth in revenue and earnings;
	•		increase value of existing assets;
	•		maintain financial strength and flexibility;
	•		participate in continued industry consolidation; and
	•		reward strong individual performance that is aligned with company goals and objectives.

What is each element of compensation?

There are five components of G&K’s executive compensation program:

	•		base salary;
	•		annual management incentive compensation (referred to as Management Incentive Plan);
	•		long-term equity-based compensation;
	•		benefits and perquisites; and
	•		severance and change-in-control benefits.

Base Salary

Base salary is fixed compensation designed to compensate NEOs for their level of experience and continued performance excellence in their individual roles. Base salary is designed to facilitate our attraction and retention of talent and to facilitate competitive pay for a specific executive job. Base salary is set in relation to the competitive market for the position and individual performance. We review executive base salary on an annual basis, and increases are based on individual performance (comparing to the median of the competitive market for each position).

Annual Management Incentive Plan

The annual Management Incentive Plan (MIP) is a variable pay program tied to achievement of annual business performance goals. The MIP is designed to compensate NEOs for meeting specific company financial goals and individual function/business goals established as part of our annual business plan. MIP targets are based on competitive market data and expressed as a percentage of base salary, as follows:

		Target Bonus
Chairman and Chief Executive Officer			75	%
Remaining NEOs			40-50	%

Management Incentive Plan Payouts

MIP payouts are calculated based on performance measures set at the beginning of each fiscal year. The measures align NEOs with clear line-of-sight responsibility to:

	•		Quantitative financial measures: revenue and EPS/operating income growth objectives have been chosen as the key financial measures of the MIP because they best represent our primary short-term benchmarks for attaining our strategy and they align with our growth goals.
	•		Key initiatives/functional objectives: key initiatives/functional objectives reward individuals for achieving goals that support and drive financial performance.

Performance Measures and Weights

The performance measures are weighted as follows:

						President
						(US				CFO
						Rental				and
Plan Components		Chairman				Ops. and				Other
and Measures		and CEO				Canada)				NEOs
Company Financial Measures:			80	%			50	%			75	%
Ø Revenue growth
Ø EPS growth
Business Unit Financial Measures							40	%
Ø Revenue growth
Ø Operating income growth
Key Initiatives/Functional Objectives			20	%			10	%			25	%

MIP Performance Targets

Incentive compensation is determined by the Compensation Committee of our Board of Directors for management level employees based generally on achievement of certain targets against an internal business plan approved annually by the Board of Directors. Over the past five years, we have achieved performance in excess of the target level two times and have achieved the maximum performance level in one of those years (fiscal 2005). Over the past five years, the payout percentage has ranged from 3% to 229% of senior executive participant’s target award opportunity, with an average payout percentage equal to approximately 90% of the total target award opportunity for this group. Management incentive payout targets generally are based on achievement of objectives for revenue, earnings per share, and performance against specified personal objectives or segment financial performance and other factors. In fiscal 2008, MIP incentive plan payout opportunities are capped at 200% of target.

The Compensation Committee of our Board of Directors sets the minimum, target and maximum levels for each company financial objective such that the relative difficulty of achieving the target level is consistent from year to year. Performance targets are established at levels that are achievable but challenging (“stretch” goals) and above prior year actual results. We believe that the disclosure of specific confidential performance targets would result in competitive harm.

Long-Term Equity Compensation

Long-term equity compensation supports strong organization performance over a long period of time (typically three years or more). Long-term equity compensation aligns NEO’s compensation with shareholders’ interests; it rewards the NEOs for increasing long-term shareholder value and promotes executive retention. Long-term equity award targets for each position are established each year based on competitive market data, also taking into account run rate and dilution. Individual equity awards are based on individual performance.

In fiscal year 2007, we granted two types of equity awards:

	•		Stock Options (Non-qualified Stock Options) — each stock option represents the right to purchase one share of our Class A Common Stock at a price equal to the fair market value of the common stock on the date of grant. Options vest and become exercisable in equal installments over three years and have a term of ten years.
	•		Restricted Stock — restricted stock represents the right to own Class A Common Stock after time restrictions lapse. Restrictions lapse in equal installments over five years.

Vesting schedules and term lengths

Vesting schedule and term lengths for new grants are reviewed from time-to-time by the Compensation Committee of our Board of Directors.

Mix

For fiscal 2007, the Compensation Committee approved equity compensation grants allocated among the types of awards, as follows:

	•		40% of the target expected value in the form of non-qualified stock options; and
	•		60% of the target expected value in the form of restricted stock.

Grant Practice

Our grant practice in recent years has been to grant equity annually on or about the first business day of September and after the fiscal year end earnings announcement, which generally happens around mid-August. The price per share of the company’s stock is set based on market close on the day of grant. In fiscal 2008, we intend to make annual grants effective as of the date of the August Board of Director’s meeting, which occurs after the year end earnings announcement. On occasion, the Compensation Committee may grant stock options or restricted stock to NEOs at times other than annual grant (e.g., upon hire or promotion), with the grant price set based on market close on date of grant.

Equity Holding Requirements

We believe that requiring executive officers to hold significant amounts of our common stock strengthens the alignment of the executive officers’ interests with those of our shareholders and promotes achievement of long-term business objectives. Equity holding requirements for our executive officers were implemented in August 2004. Since August 2004, members of the executive committee have been required to hold for three years one-half of all shares granted, net of the number of shares required to cover estimated taxes and exercise cost. The holding requirement applies to restricted stock at the time of vesting and stock options at the time of exercise. Effective for fiscal 2008, we have adopted expanded equity ownership guidelines for our executive officers. Specifically, NEOs have five years to achieve ownership targets of five times base salary for our Chairman and Chief Executive Officer and three times base salary for the remaining NEOs.

Benefits

Benefits include health and welfare, retirement, and perquisite programs that are intended to provide financial protection and security to NEOs and their families and to reward their dedication and long-term commitment to the company. Company sponsorship (coupled with competitive employee cost-sharing arrangements) of these plans is critical to our ability to attract and retain the talent we need to support our overall business objectives. NEOs have the opportunity to participate in the same retirement, health and welfare plans as other company salaried employees and have supplemental benefits provided as well:

	•		Pension plan (frozen as of January 1, 2007)
	•		Supplemental Executive Retirement Plan (SERP)(frozen as of January 1, 2007) (We redesigned our company-sponsored retirement program for U.S. non-union employees, including the U.S. NEOs, to maintain competitive retirement benefits while reducing the volatility of future company defined benefit pension costs. The new program, which took effect January 1, 2007, included freezing the pension and SERP benefits and enhancing the 401(k) and DEFCO.)
	•		Executive Deferred Compensation Plan (DEFCO)
	•		executive long-term disability insurance
	•		financial planning services

	o		Chairman and Chief Executive Officer — $5,000 each year
	o		other NEOs — $2,500 each year

	•		executive physical
	•		leased automobile
	•		country club dues (Chairman and Chief Executive Officer and Chief Financial Officer) (country club dues have been eliminated starting in fiscal 2008)

Severance and Change-in-Control Benefits

Severance and change-in-control benefits include salary and certain benefits that are paid in the event of termination of employment under certain circumstances, including following a change-in-control. Severance and change-in-control benefits help attract executive talent, assist with the career transition of executives, and create an environment that provides for adequate business transition and knowledge transfer during times of change. The level of this severance protection is established to be competitive with market best practices. We have entered into agreements with each of our NEOs that provide benefits to the executive if he or she is terminated after a change in control of the company. With respect to the Chairman and Chief Executive Officer in particular, benefits are provided if he is terminated at any time, for any reason, within two years following a change in control. With respect to other NEOs, benefits are provided if an NEO is terminated within one year following a change of control if the termination is by the employer without cause, or by the executive for good reason. The various key terms are defined specifically in each agreement. Severance benefits are payable in such circumstances. In the event of a change in control, and regardless of whether the executive is terminated, unvested equity awards will vest immediately upon the change in control, consistent with the provisions of our equity compensation plan.

These agreements were put in place to assure that we will have the continued dedication, undivided loyalty and objective advice and counsel from these key executives in the event of a proposed transaction, or the threat of a transaction, which could result in a change in control of the company. We also believe that these agreements are beneficial to the company because, in consideration for these severance arrangements, the executives agree to noncompetition and nonsolicitation covenants for a period of time following termination of employment.

Why does the company choose to pay each element?

We strive to effectively utilize elements of compensation under a total reward philosophy that combines annual and multi-year reward opportunities. Our intent is to develop a compensation program that rewards the annual

accomplishment of the company’s goals and objectives while supporting the company’s long-term business strategy. The Compensation Committee of our Board of Directors approves the overall executive compensation program and the specific levels of compensation for each executive.

How does the company determine the amount/formula for each element?

Executive compensation is reviewed annually, as follows:

Compensation
Committee Meeting
Held In:		Agenda
February		Compensation Committee reviews and approves the peer group
May		Compensation Committee reviews market data, establishes equity guidelines, reviews MIP plan design and establishes preliminary company financial performance targets for the upcoming fiscal year
June		Compensation Committee approves MIP plan design and company financial performance targets, which are subsequently approved by our entire board
August		Compensation Committee reviews performance for prior year and approves merit increases, equity grants, and MIP payouts, provided that the full Board of Directors approves all compensation actions for NEOs

Executive compensation is set at levels that the Compensation Committee believes to be competitive with those offered by employers of comparable size, growth and profitability in the company’s industry and in general industry as well. Annually, the Compensation Committee reviews all elements of executive compensation, individually and in the aggregate, against market data for companies with which we compete for executive talent. The Compensation Committee’s independent compensation consultant works with our internal human resources and benefits professionals in conducting research and formulating recommendations for the Compensation Committee’s consideration to determine the levels and components of compensation to be provided for the fiscal year. The independent compensation consultant also provides background material for consideration by the Compensation Committee with respect to compensation for our Chairman and Chief Executive Officer. The Compensation Committee evaluates our executive compensation based on competitive market information from:

	•		proxy data from a “peer group” of publicly-traded companies with similar industry sector (business services) and similar size (revenue, capitalization, number of employees); and
	•		general survey data based on similar sized companies

Peer Group Data

The various elements of our executive compensation program for fiscal 2007 were benchmarked relative to the compensation provided to executives of the following peer group:

	•		Apogee Enterprises, Inc.
	•		Bowne & Company
	•		Ceridian Corporation
	•		ChoicePoint, Inc.
	•		Cintas Corporation
	•		Comfort Systems USA, Inc.
	•		Crawford & Company
	•		Deluxe Corporation
	•		Donaldson Company, Inc.
	•		Hanover Compressor Co. (Holding Co.)
	•		Kinetic Concepts, Inc.
	•		Labor Ready, Inc.
	•		NCO Group, Inc.
	•		Paychex, Inc.
	•		Rollins, Inc.
	•		SITEL Corporation
	•		UniFirst Corporation
	•		Universal Compression Holdings, Inc.

General Survey Data

We benchmark NEO compensation to survey data based on job responsibility, generally using market median data from companies with revenues from $500 million to $3 billion. As our revenue grows, we are moving to be competitive with companies with annual revenue in the $1 to $3 billion range. Our plan design, plan features, and participant eligibility were also benchmarked as part of the overall analysis process.

How does each element and the company’s decision regarding that element fit into the company’s overall compensation objectives and affect decisions regarding other elements?

In general, an NEO’s compensation at target is weighted more heavily on variable performance-based compensation than on fixed base compensation. This pay mix supports their roles in enhancing value to shareholders over the long-term. The variable pay components, at target (annual and long-term incentives), represented more than one-half of the total pay opportunity for all NEOs, including our Chairman and Chief Executive Officer, all of which is at risk. Through this mix of pay, non-performance has a significant affect on the amount of compensation realized by NEOs. In making actual individual pay decisions, the Compensation Committee considers company performance and individual NEO performance.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code limits the tax deductibility of compensation in excess of $1million paid to our Chief Executive Officer and three other highly compensated executive officers (covered employees), unless the compensation constitutes “qualified performance-based compensation,” as defined in Section 162(m) thereof. While the Compensation Committee considers the deductibility of compensation arrangements as an important factor in executive compensation decisions for executives, deductibility is not the sole factor used by the Compensation Committee in ascertaining appropriate levels or modes of compensation. We believe that, to remain competitive, we must maintain a compensation program that will continue to attract, retain, and reward the executive talent necessary to maximize shareholder return. All covered employee compensation for the past five years has been tax deductible.

Compensation Committee Report

The Compensation Committee of our Board of Directors has furnished the following report:

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with the company’s management. Based on that review and discussion, the Compensation Committee has recommended to the company’s Board of Directors that the Compensation Discussion and Analysis be included in the company’s proxy statement for the 2007 annual meeting of shareholders.

Wayne M. Fortun
J. Patrick Doyle
John S. Bronson

2007 Summary Compensation Table

The table below shows the compensation of the company’s Chairman and Chief Executive Officer, Chief Financial Officer and each of the other three most highly compensated executive officers for services in all capacities to the company in fiscal 2007, except as otherwise indicated. For a discussion of the amount of an NEO’s salary and bonus in proportion to his total compensation, please see the Compensation Discussion and Analysis on pages 5 to 9.

We believe that our compensation practices are fair and reasonable. Our executive officers are not guaranteed salary increases or bonus amounts. Pension benefits have been frozen and are calculated on salary and bonus only; the proceeds earned on equity or other performance awards are not part of the pension calculation. We do not guarantee a return or provide above-market returns on compensation that has been deferred. We have not repriced stock options, and we do not grant reload options. We believe our compensation program holds our executive officers accountable for the financial and competitive performance of our company, and for their individual contribution toward that performance.

																										Change in
																										Pension Value
																										and
																										Nonqualified
														Restricted								Non-Equity				Deferred
														Stock				Stock				Incentive				Compensation				All Other
						Salary				Bonus				Awards				Options				Compensation				Earnings ($)				Compensation
NEO		Year				($) (1)				($) (2)				($) (3)				($) (4)				($) (5)				(6)				($) (7)				Total ($)
Richard L. Marcantonio			2007				666,346				—				249,101				219,215				366,201				74,845				241,923				1,817,630
Jeffrey L. Wright			2007				312,404				—				113,898				87,318				115,349				32,919				80,763				742,651
Robert G. Wood			2007				377,461				—				75,113				73,963				81,969				—				138,532				747,038
David M. Miller			2007				297,194				—				55,713				89,567				77,950				25,997				36,168				582,589
David F. Fisher			2007				240,830				—				23,942				40,191				69,696				4,036				38,415				417,110

All Other Compensation
		Tax								Country								Personal												Tax-												Total
		Gross-								Club				Financial				Use of				401(k)				DEFCO				able								Executive				Other
		up ($)				Loan				Dues				Planning				Car ($)				Match				Match				Life ($)				Pension				LTD ($)				Compen
NEO		(1)				($) (2)				($) (3)				($) (4)				(5)				($) (6)				($) (7)				(8)				($) (9)				(10)				-sation
Richard L. Marcantonio			74,097				40,000				3,438				6,900				20,109				12,390				84,988				—				—				—				241,923
Jeffrey L. Wright			22,763				—				8,114				1,874				11,424				7,173				29,415				—				—				—				80,763
Robert G. Wood			32,147				—				—				98				14,204				—				—				855				90,045				1,183				138,532
David M. Miller			—				—				—				2,500				12,854				5,716				15,098				—				—				—				36,168
David F. Fisher			—								—				2,500				10,680				4,022				21,213				—				—				—				38,415

Grants of Plan-Based Awards in fiscal 2007

The following table shows the grants of plan-based awards to the NEOs in fiscal 2007.

																																						All Other
																																		All Other				Option								Grant
																																		Stock				Awards:				Exercise				Date Fair
										Estimated Future Payouts Under												Estimated Future Payouts												Awards:				Number				or Base				Value of
										Non-Equity Incentive Plan												Under Equity Incentive Plan												Number of				of Shares				Price of				Stock and
										Awards ($) (1)												Awards (2)												Shares of				of Stock				Option				Option
		Grant				Approval				Thresh-								Max-				Thresh-								Maxi-				Stock or				or Units				Awards				Awards
Name		Date				Date				old				Target				imum				old				Target				mum				Units (3)				(4)				($) (5)				($) (6)
Richard L. Marcantonio			9/1/2006				8/23/2006				0				506,250				(1	)			—				—				—				13,000				26,001				33.11				643,118
Jeffrey L. Wright			9/1/2006				8/23/2006				0				157,500				(1	)			—				—				—				6,365				12,120				33.11				309,887
Robert G. Wood			9/1/2006				8/23/2006				0				188,730				(1	)			—				—				—				4,060				7,731				33.11				197,666
David M. Miller			9/1/2006				8/23/2006				0				149,350				(1	)			—				—				—				3,150				6,000				33.11				153,377
David F. Fisher			9/1/2006				8/23/2006				0				96,820				(1	)			—				—				—				2,205				4,197				33.11				107,339

Outstanding Equity Awards at Fiscal Year-End 2007

The following table shows the outstanding equity awards for each of the NEOs as of June 30, 2007:

		Option Awards																				Stock Awards
																																		Equity
																																		Incentive
																														Equity				Plan
																														Incentive				Awards:
																										Market				Plan				Market or
										Number of												Number				Value of				Awards:				Payout
										Incentive Plan												of Shares				Shares or				Number of				Value of
										Awards:												or Units				Units of				Unearned				Unearned
		Number of				Number of				Number of												of Stock				Stock				Shares,				Shares,
		Securities				Securities				Securities												that				That				Units or				Units or
		Underlying				Underlying				Underlying												Have				Have				Other				Other
		Unexercised				Unexercised				Unexercised				Option				Option				Not				Not				Rights That				Rights That
		Options				Options				Unearned				Exercise				Expiration				Vested				Vested				Have Not				Have Not
Name		Exercisable				Unexercisable				Options				Price ($)				Date (5)				(6)				($) (7)				Vested (8)				Vested (9)
Richard L. Marcantonio			100,000				—								31.32				7/15/12				17,552				693,480				—				—
			10,000				—								35.69				1/2/13
			17,220				—								32.57				8/25/13
			14,640				—								36.41				8/31/14
			14,000				7,000	(1)							42.97				9/1/15
			8,667				17,334	(2)							33.11				9/1/16
Jeffrey L. Wright			7,500				—								53.34				2/8/09				8,910				352,034				—				—
			1,540				—								41.56				9/1/09
			2,639				—								28.50				9/1/10
			3,220				—								27.95				9/1/11
			10,000				—								35.69				1/2/13
			10,002				—								32.57				8/25/13
			5,700				—								36.41				8/31/14
			6,334				3,167	(1)							42.97				9/1/15
			4,040				8,080	(2)							33.11				9/1/16
Robert G. Wood			800				—								46.00				9/1/08				5,974				236,033				—				—
			1,560				—								41.56				9/1/09
			6,000				—								35.69				1/2/13
			6,000				—								32.57				8/25/13
			7,300				—								36.41				8/31/14
			4,100				2,050	(1)							42.97				9/1/15
			450				900	(3)							39.09				2/22/16
			2,577				5,154	(2)							33.11				9/1/16
David M. Miller			6,667				13,333	(4)							38.33				12/19/15				6,520				257,605				—				—
			2,000				4,000	(2)							33.11				9/1/16
David F. Fisher			5,000				—								35.67				5/19/14				2,586				102,173				—				—
			2,734				1,367	(1)							42.97				9/1/15
			1,399				2,798	(2)							33.11				9/1/16

						Richard L.				Jeffrey L.				Robert G.				David M.				David F.
		Vesting Date				Marcantonio				Wright				Wood				Miller				Fisher
			12/19/2007																1,000
			1/1/2008				1,000				1,136				1,136
			2/22/2008												90
			8/31/2008				976				390
			9/1/2008				4,000				1,907				1,222				630				715
			12/19/2008																1,000
			2/22/2009												90
			8/31/2009				976				390
			9/1/2009				4,000				1,907				1,222				630				715
			12/19/2009																1,000
			2/22/2010												90
			9/1/2010				4,000				1,907				1,222				630				715
			12/19/2010																1,000
			2/22/2011												90
			9/1/2011				2,600				1,273				812				630				441
		Total					17,552				8,910				5,974				6,520				2,586

2007 Option Exercises and Stock Vested

The following table lists the number of shares acquired and the value realized as a result of option exercises by the NEOs in fiscal 2007 and the value of any restricted stock units that vested in fiscal 2007:

		Option Awards								Stock Awards
		Number of Shares				Value Realized on				Number of Shares				Value Realized on
Name		Acquired on Exercise				Exercise ($)				Acquired on Vesting				Vesting ($)
Richard L. Marcantonio			0				0				6,376				235,098	(1)
Jeffrey L. Wright			0				0				2,521				92,450	(2)
Robert G. Wood			0				0				2,427				91,096	(3)
David M. Miller			0				0				1,000				38,480	(4)
David F. Fisher			0				0				274				9,072	(5)

Fiscal 2007 Pension Benefits

The following table shows the present value as of June 30, 2007 of the benefit of the NEOs under our qualified defined benefit pension plan:

				Number of Years
				of Service
				Credited Under
				Plan at FAS		Present Value of
				Measurement		Accumulated Benefit				Payments During Last
Name		Plan Name		Date (#)		($)				Fiscal Year ($)
Richard L. Marcantonio		G&K Services Pension Plan		5.00			66,657				0
		G&K Services SERP		5.00			506,890				0
Jeffrey L. Wright		G&K Services Pension Plan		8.00			46,531				0
		G&K Services SERP		8.00			113,669				0
Robert G. Wood		G&K Services Pension Plan		N/A			N/A				N/A
		G&K Services SERP		N/A			N/A				N/A
David M. Miller		G&K Services Pension Plan		0.00			0				0
		G&K Services SERP		1.00			28,046				0
David F. Fisher		G&K Services Pension Plan		3.00			43,769				0
		G&K Services SERP		3.00			86,719				0

G&K Services Pension Plan

Our NEOs (with the exception of Mr. Wood) participate in our qualified defined pension plan. Effective December 31, 2006, benefits under this plan were frozen, meaning the accrual of future benefits under the plan were discontinued. Benefits are the greater of the amounts determined under the 1989 pension formula or, if the participant is eligible, under the 1988 Pension Formula.

The 1989 pension formula is 2/3rds of 1% of participant’s average compensation plus one-half of 1% of average compensation in excess of covered compensation, multiplied by benefit accrual service at December 31, 2006 (or termination, if earlier, not to exceed 30)

The 1988 Pension Formula

	•		Eligibility — if a participant had an accrued benefit under the pension plan as of December 31, 1988, and the participant was not a “Highly Compensated Employee” during the 1989 plan year, he or she is eligible to continue to earn benefits under the 1988 pension formula until the earlier of December 31, 2006, termination or the end of the year preceding the plan year in which he or she became a Highly Compensated Employee.
	•		Formula — 50% of the participant’s average compensation, less 75% of the estimated primary social security benefit, multiplied by years of benefit accrual service at December 31, 2006 (or termination, if earlier, not to exceed 30), divided by 30.

Compensation generally means wages, salaries, and other amounts earned for services with the company. This includes, among other items, commissions, incentives, bonuses, and pre-tax contributions to the 401(k) plan. This excludes, among other items, deferrals to deferred compensation plans, amounts realized from stock option plans, and fringe benefits. Average compensation is the average of the five highest consecutive years of compensation out of the ten consecutive years preceding December 31, 2006 (or termination, if earlier). Covered compensation is the average of social security taxable wage bases for the 35-year period ending with the participant’s social security retirement age. An employee attains normal retirement age on the later of the date he or she attains age 65 or the fourth anniversary of the first day of the plan year in which the employee became a participant in the plan. A participant is vested after completing five years of vesting service and is then eligible for vested termination benefits. A vested terminated participant is eligible to commence benefits as early as age 55, in which case, benefits are reduced 6^2/3% for each of the first five years commencements precedes normal retirement age and 3^1/3% for each year thereafter. A participant is eligible for subsidized early retirement benefits if termination occurs after age 60 with at least 30 years of benefit accrual service, in which case, benefits are reduced 3% for each year commencement precedes normal retirement age.

None of the NEOs are currently eligible for subsidized early retirement benefits; although Mr. Marcantonio is eligible to receive the benefits otherwise described in the Change in Control section on page 18 hereof upon certain employment termination events.

The normal payment form is the life only annuity. A variety of other payment forms are available, all equivalent in value if paid over an average lifetime.

G&K Services Supplemental Executive Retirement Plan

The NEOs participate in our supplemental non-qualified defined benefit plan. Effective December 31, 2006, benefits under the plan were frozen, meaning the accrual of future benefits under the plan were discontinued.

Benefits under the plan are determined as 50% of average compensation, multiplied by the ratio of benefit accrual service at December 31, 2006 (or termination, if earlier), divided by projected benefit accrual service to age 60 (no less than 30) determined as of December 31, 2006. If, at December 31, 2006, the participant was at least age 60, then the ratio is benefit accrual service at December 31, 2006 (or termination, if earlier, not to exceed 30) divided by 30. This benefit is subsequently reduced by our pension plan benefits.

Compensation is generally equal to the compensation used for purposes of our pension plan, but also includes any deferrals the participant made to a deferred compensation plan sponsored by the company. Average compensation is the average of the five highest consecutive years of compensation out of the ten consecutive years preceding December 31, 2006 (or termination, if earlier). An employee attains normal retirement age on the date he or she attains age 65. A participant is vested after completing five years of participation service. A vested terminated participant is eligible to commence benefits as early as age 55. A participant is eligible for early retirement benefits if termination occurs after attainment of age 55 and the participant is vested. In either case, the benefit determined for commencement prior to age 65 is the age 65 benefit, before reduction for our pension plan benefit offset, reduced 3^1/3% for each of the first five years commencement precedes age 65 and 6^2/3% for each year thereafter. This is subsequently reduced by our pension plan benefit reduced for commencement under the terms of that plan as of the same date.

Mr. Marcantonio is currently eligible for early retirement under our SERP. The monthly life only benefit, if commenced July 1, 2007, would be $4,329.

The normal payment form is the life only annuity. A variety of other payment forms are available, all equivalent in value if paid over an average lifetime. Distributions are subject to compliance with Section 409A of the Internal Revenue Code.

The SERP contains a non-compete provision. If the participant enters into competition with the company during

the three year period following termination of employment, benefits under the SERP are forfeited. This provision is waived for participants working with the company beyond age 65.

FY2007 Nonqualified Deferred Compensation

The following table shows contributions to the NEOs’ deferred compensation account in fiscal 2007 and the aggregate amount of deferred compensation as of June 30, 2007:

		Executive												Aggregate
		Contributions				Registrant				Aggregate				Withdrawals/
		in Last FY ($)				Contributions in				Earnings in Last				Distributions				Aggregate
Name		(1)				Last FY ($)				FY ($)				($)				Balance ($)
Richard L. Marcantonio			128,395				84,988				141,140				—				354,523
Jeffrey L. Wright			50,653				29,415				77,826				—				157,894
Robert G. Wood			N/A				N/A				N/A				N/A				N/A
David M. Miller			22,440				15,098				5,940				—				43,478
David F. Fisher			48,710				21,213				21,098				—				91,021

Change in Control

Following is a discussion of the potential payments under current programs to any of the NEOs in the event of a change in control of the company, followed by a “Change in Control Termination”. At the end of this section is a table indicating the estimated incremental amounts that would have been triggered for each NEO had there been a Change in Control Termination as of June 30, 2007.

We entered into executive employment agreements with Mr. Wright on January 1, 2001; Mr. Marcantonio on July 15, 2002; Mr. Wood on January 1, 2001; Mr. Fisher on May 10, 2004; and Mr. Miller on December 19, 2005. In fiscal 2007, we entered into new employment agreements with four of our NEOs (Messrs Marcantonio, Miller, Wood, and Fisher) to:

	•		eliminate some inconsistencies among our current agreements with our executives;
	•		address changes in executive compensation arrangements and competitive issues;
	•		address governance trends; and
	•		allow for periodic review of the agreements by us.

No changes were made to Mr. Wright’s employment agreement during fiscal year 2007.

The employment agreements address termination due to Change in Control and for Good Reason, and provide as follows:

A “Change in Control” occurs when:

	•		anyone attains control of 30% of our voting stock;
	•		challengers replace a majority of our Board of Directors within two years; or
	•		a merger or consolidation with, or disposal of substantially all of our assets to, someone other than the company.

A “Change in Control Termination” occurs with respect to the Chairman and Chief Executive Officer when a Change in Control has taken place and the Chairman and Chief Executive Officer then is terminated within two years of the Change in Control either by the employer for any reason other than for cause, or by the Chairman and Chief Executive Officer for any reason. A “Change in Control Termination” occurs with respect to other NEOs when a change in control has taken place and the NEO then is terminated within one year of the change in control either by the employer for any reason other than for cause, or by the NEO for good reason. Good reason is defined following a change in control, with respect to NEOs other than the Chairman and Chief Executive Officer, to include the following:

	•		a substantial adverse involuntary change in the NEO’s status or position as an executive with the company;
	•		a material reduction by the company in the NEO’s base salary as in effect on the day before the change in control;
	•		material adverse affect in physical working conditions, interfering with the NEO’s work;
	•		a requirement to relocate, other than on intermittent basis, more than 35 miles from corporate headquarters as a condition of employment;
	•		failure by the company to obtain from any successor an assumption of the Employment Agreement; or
	•		attempted termination other than pursuant to the Employment Agreement; or any material breach of the Employment Agreement

Our Chairman and Chief Executive Officer’s executive employment agreement provides that the he may terminate employment for good reason at any time and receive severance benefits, including following a change in control. The definition of good reason in the case of the Chairman and Chief Executive Officer is substantially the same as stated here.

Severance

We are required to make certain payments and to extend certain benefits to our NEO in the event of any termination of our various employment agreements with our NEOs or an NEO’s employment thereunder. Specifically, in the event that an NEO’s employment under the agreement is terminated by us without cause, we must provide to such NEO the following benefits:

	•		we must pay to such NEO, as separation pay, an amount equal to eleven months of such NEO’s monthly base salary in effect as of the actual date of termination, such separation pay being made in weekly payments, subject to the terms of such release;
	•		subject to the our right to make a lump sum payment to an NEO, if such NEO (or any individual receiving group health plan benefits through him or her) is eligible under applicable law to continue participation in our group health plan and elects to do so, we will, for a period of up to 17 months commencing as of the actual date of termination, continue to pay such NEO’s share of the cost of such benefits as if such NEO remained in our continuous employment, but only while such NEO or such person is not eligible for coverage under any other employer’s group health plan;
	•		we will, for a period of at least six months commencing as of the actual date of termination, pay directly to the subject provider or reimburse such NEO for all reasonable expenses of a reputable outplacement organization selected by such NEO, such payments not to exceed $12,000.00 in the aggregate; and
	•		we will pay to such NEO any unpaid management incentive bonus earned by such NEO and to which such NEO is entitled as of the last day of the fiscal year prior to the actual date of termination, such payment being made in accordance with the terms of the related plan.

No Executive is required to mitigate our foregoing payment and other obligations, and any NEO’s commencement of employment with another employer will not reduce such obligations.

The table below provides the estimated amounts that would have been triggered for each NEO had there been a termination described above as of June 30, 2007:

Name		Severance ($)				Health Benefits ($)				Outplacement ($)				Car ($)				Total ($)
Marcantonio, Richard L.			2,018,250	(1)			17,068	(3)			25,000	(6)			18,270	(8)			2,078,588
Wright, Jeffrey L.			288,750	(2)			10,430	(4)			12,000	(7)							311,180
Wood, Robert G.			346,005	(2)			16,120	(5)			12,000	(7)							374,125
Miller, David M.			273,808	(2)			16,120	(5)			12,000	(7)							301,928
Fisher, David F.			221,879	(2)			16,120	(5)			12,000	(7)							249,999
Total			3,148,692				75,858				73,000				18,270				3,315,820

 

Below is a summary of the benefits provided to the NEOs upon termination employment due to a change in control, the same being qualified in its entirety by reference to the copies of the related agreements previously filed by us and the summary descriptions include with such filings.

The table below provides the estimated incremental amounts that would have been triggered for each NEO had there been a Change in Control Termination as of June 30, 2007:

Name		Severance ($)				Incentive Pay ($)				Health Benefits ($)				Outplacement ($)				Car ($) (10)				Financial Planning				Total ($)
Marcantonio, Richard L.			2,018,250	(1)			1,513,688	(4)			17,068	(5)			25,000	(8)			40,000				5,000	(11)			3,619,006
Wright, Jeffrey L.			315,000	(2)			N/A				10,430	(6)			12,000	(9)			N/A				N/A				337,430
Wood, Robert G.			534,735	(3)			N/A				16,120	(7)			12,000	(9)			11,510				2,500	(12)			576,865
Miller, David M.			423,158	(3)			N/A				16,120	(7)			12,000	(9)			36,000				2,500	(12)			489,778
Fisher, David F.			342,904	(3)			N/A				16,120	(7)			12,000	(9)			43,000				2,500	(12)			416,524
Total			3,634,047				1,513,688				75,858				73,000				130,510				12,500				5,439,603

Compensation Paid to Board Members

During fiscal 2007, we paid each director who was not otherwise employed by us an annual fee of $32,000, along with a $2,000 fee for each meeting of the Board of Directors attended in person ($500 for those attended telephonically), and $1,000 for each committee meeting of the Board of Directors attended in person ($500 for those attended telephonically). We also paid a $20,000 retainer to the Presiding Director, a $10,000 retainer to the Chair of the Audit Committee, and a $5,000 retainer to the Chairs of the Compensation and Governance Committees.

In addition, directors who are not otherwise employed by the company participate in the Director Stock Option Plan, which provides for an annual grant to non-employee directors of options to purchase Class A Common Stock. For fiscal 2007, directors were granted 2,400 shares at an option exercise price equal to the market closing price on the date of grant. Each option has a 10-year term and becomes exercisable on the first anniversary of the grant date. Members who were serving as directors upon the original adoption of the 1996 Plan received one-time grants of options to purchase 3,000 shares of Class A Common Stock upon such adoption and, thereafter, each new director has received a one-time grant of options to purchase 3,000 shares of Class A Common Stock upon his or her initial election to the Board of Directors. Each of the 3,000 share options has a 10-year term and vests in three equal installments on each of the first, second and third anniversaries of the grant date.

Directors also receive an annual stock grant for non-employee directors. For fiscal 2007, the stock grant was 1,200 shares of Class A Common Stock on the first business day of each calendar year.

Each director who is not an employee of the company or one or its subsidiaries is eligible to participate in our Amended and Restated Director Deferred Compensation Plan, under which the non-employee director may elect to defer all or part of his or her Board of Director fees and annual stock grants until the earlier of a specific date identified by the non-employee director or the termination of his or her services as a member of the board for any reason. The amount of any cash compensation deferred by a non-employee director is converted into a number of stock units, determined based upon the average of the closing prices of our Class A Common Stock on the NASDAQ National Market during the ten business days preceding the relevant valuation date, and is credited to a deferred compensation account maintained in his or her name. Deferred stock grants are converted on a share-for-share basis on the date of deferral and also credited to the non-employee director’s account. The account will be credited with additional stock units, also based on such average market value, upon payment date for any dividends declared on our Class A Common Stock. At the end of the deferral period, the amounts accumulated in the deferred compensation account will be distributed in the form of Class A Common Stock equal to the number of whole stock units in the account and cash in lieu of any fractional shares (based on such average market value as of the distribution date).

Non-employee directors are not eligible to participate in any company-sponsored pension plan.

Director Summary Compensation Table

The following table shows the compensation of the company’s non-employee directors for services in all capacities to us in 2007, except as otherwise indicated.

We also have in place stock ownership guidelines for our directors. Specifically, each of our directors is required to own a minimum number of shares equal to three times the directors’ annual base retainer. Once achieved, each director must maintain this ownership level at all times during their tenure with the company.

																		Change in
														Non-Equity				Pension Value
		Fees Earned				Stock								Incentive				and Deferred				All Other
		or Paid in				Awards				Option				Compensation				Compensation				Compensation
Name		Cash (1) ($)				(2) ($)				Awards				($)				Earnings ($)				($)				Total ($)
Michael Allen			48,000				46,668				27,141	(3)			N/A				N/A				N/A				121,809
Paul Baszucki			48,000				46,668				27,141	(3)			N/A				6,017	(8)			N/A				127,826
John Bronson			53,000				46,668				35,016	(4)			N/A				N/A				N/A				134,684
J Patrick Doyle			47,500				46,668				37,931	(5)			N/A				N/A				N/A				132,099
Wayne Fortun			52,500				46,668				27,141	(3)			N/A				5,839	(9)			N/A				132,148
Ernest Mrozek			46,000				46,668				38,631	(6)			N/A				N/A				N/A				131,299
Lenny Pippin			73,000				46,668				27,141	(3)			N/A				2,998	(10)			N/A				149,807
Alice Richter			58,000				46,668				32,115	(7)			N/A				N/A				N/A				136,783

P R O P O S A L  N U M B E R 2:

To Ratify the Appointment of Independent Auditors

Our Board of Directors and management are committed to the quality, integrity and transparency of the company’s financial reports. Independent auditors play an important part in our system of financial control. In accordance with the duties set forth in its written charter, the Audit Committee of our Board

of Directors has appointed Ernst & Young LLP as our independent auditors for the 2007 fiscal year. A representative of Ernst & Young LLP will attend this year’s annual meeting and will be available to respond to appropriate questions from shareholders, and also will have the opportunity to make a statement if he or she desires to do so.

If the shareholders do not ratify the appointment of Ernst & Young LLP, the Audit Committee may reconsider its selection, but is not required to do so. Notwithstanding the proposed ratification of the appointment of Ernst & Young LLP by the shareholders, the Audit Committee, in its discretion, may direct the appointment of new independent auditors at any time during the year without notice to, or the consent of, the shareholders, if the Audit Committee determines that such a change would be in our best interests and the best interests of our shareholders.

Fees Billed to Company by Auditors:

Set forth below are the fees billed by Ernst & Young LLP for the fiscal years ended June 30, 2007 and July 1, 2006:

		Fiscal Year				Fiscal Year
		Ended				Ended
		June 30, 2007				July 1, 2006
Audit Fees(1)		$	688,800			$	628,700
Audit-Related Fees(2)			16,200				61,792
Tax Fees			376,159	(3)			182,712	(4)
All Other Fees			—				—
Total		$	1,081,159			$	873,204

The Audit Committee of our Board of Directors has reviewed the services described in footnotes (2) and (3) above provided by Ernst & Young LLP as well as the amounts billed for such services, and after consideration has determined that the receipt of these fees by Ernst & Young LLP is compatible with the provision of independent audit services. The Audit Committee has discussed these services and fees with Ernst & Young LLP and management to determine that they are appropriate under applicable rules and regulations.

Pre-Approval Policy

All services performed by Ernst & Young LLP have been pre-approved in accordance with the Audit Committee charter. The charter provides that all audit and non-audit accounting services that are permitted to be performed by our independent accountant under applicable rules and regulations must be pre-approved by the Audit Committee or by designated independent members of the Audit Committee, other than with respect to de minimus exceptions permitted under Section 202 of the Sarbanes-Oxley Act of 2002.

Prior to or as soon as practicable following the beginning of each fiscal year, a description of audit, audit-related, tax, and other services expected to be performed by Ernst & Young LLP in the following fiscal year is presented to the Audit Committee for approval. Following such approval, any requests for audit, audit-related, tax, and other services not presented and pre-approved must be submitted to the Audit Committee for specific pre-approval and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings. However, the authority to grant specific pre-approval between meetings, as necessary, may be delegated to one or more members of the Audit Committee who are independent directors. In the event such authority is so delegated, the full Audit Committee must be updated at the next regularly scheduled meeting with respect to any services that were granted specific pre-approval by delegation. During the fiscal year 2007 the Audit Committee has functioned in conformance with these procedures.

GOVERNANCE OF THE COMPANY

Board of Directors and Committees

Board of Directors

Our Board of Directors held seven meetings during fiscal 2007, five of which were held in person and two of which were conducted via telephone. We have established certain committees of our Board of Directors, as follows: an Audit Committee, a Compensation Committee and a Corporate Governance Committee. No director attended fewer than 75% of the aggregate number of meetings of the Board of Directors and the committees of the board on which such director served during the 2007 fiscal year. On August 25, 2005, the Board of Directors created the position of Presiding Director and elected Mr. M. Lenny Pippin to serve in that capacity. Chosen from among the board’s independent directors, the Presiding Director’s primary responsibility is to ensure that the board functions independently of management and that proper communication is maintained among management and the board’s independent directors.

Director Attendance at Annual Meetings of Shareholders

We do not have a formal policy with respect to attendance by board members at the annual meeting of shareholders, but all directors are encouraged to attend, and we attempt to coordinate scheduling of our annual meeting of shareholders

to accommodate attendance by directors. All of our directors attended our fiscal 2007 annual meeting of shareholders.

Independence

With the exception of Mr. Marcantonio, all of the members of our Board of Directors are independent within the meaning of applicable Nasdaq and SEC rules.

Corporate Governance Committee

We have established a Corporate Governance Committee of the Board of Directors comprised solely of “independent directors” (as defined by applicable rules and regulations of the Securities Exchange Commission, Nasdaq and other relevant regulatory bodies), at least one of whom also serves on the Compensation Committee of the board. The primary role of the Corporate Governance Committee is to monitor the effectiveness of the board in carrying out certain responsibilities, and to review annually the performance of the company’s Chief Executive Officer and the operation of the full Board of Directors (including its Chair and its various committees). In addition, the Corporate Governance Committee presents qualified director candidates to the full board and considers qualified nominees recommended by shareholders.

The Corporate Governance Committee, which presently consists of Chair M. Lenny Pippin, Messrs. Baszucki and Bronson held five meetings during fiscal 2007, all of which were held in person, and did not take action by written consent. The report of the Corporate Governance Committee appears below. Our Board of Directors has adopted a written charter for the Corporate Governance Committee, a copy of which is available at our website at http://www.gkservices.com.

Audit Committee

We have established an Audit Committee of the Board of Directors which assists the Board of Directors in fulfilling certain oversight responsibilities and consists solely of independent directors. The Audit Committee operates pursuant to a written charter adopted by the Board of Directors, a copy of which is available at our website at http://www.gkservices.com. As set forth in the charter, the primary responsibilities of the Audit Committee include: (i) serving as an independent and objective party to monitor our financial reporting process and internal control system; (ii) reviewing and appraising the audit efforts of our independent auditors and internal audit department; and (iii) providing an open avenue of communication among the independent auditors, financial and senior management, the internal audit department, and our Board of Directors. The charter also requires that the Audit Committee appoint our independent auditors and review and pre-approve the performance of all audit and non-audit accounting services to be performed by our independent auditors, other than services falling within the de minimus exceptions permitted under Section 202 of the Sarbanes-Oxley Act of 2002.

The Audit Committee, which presently consists of Chair Alice M. Richter and Messrs. Allen and Mrozek, held nine meetings during fiscal 2007, four of which were held in person and five of which were conducted via telephone, and did not take action by written consent. The Audit Committee met and held discussions with financial management and representatives from Ernst & Young LLP prior to the public release of earnings information for each of our completed fiscal periods, and prior to each quarterly report on Form 10-Q and annual report on Form 10-K being filed with the Securities and Exchange Commission.

Our Board of Directors has determined that two members of the Audit Committee, specifically Ms. Richter and Mr. Mrozek, are “Audit Committee Financial Experts” as that term is defined in Item 401(h)(2) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended. In addition, each member of the Audit Committee (including Ms. Richter and Mr. Mrozek) is an “independent director,” as such term is defined in Rule 4200(a)(15) of Nasdaq’s listing standards, and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. Our Board of Directors has also determined that each of the Audit Committee members is able to read and understand fundamental financial statements and that at least one member of the Audit Committee has past employment experience in finance or accounting.

Compensation Committee

The Compensation Committee of the Board of Directors, which presently consists of Chair Wayne M. Fortun and Messrs. Bronson and Doyle, held six meetings during fiscal 2007, all but one of which was held in person. All members of the Compensation Committee are independent directors within the meaning of Nasdaq’s Rule 4200(a)(15). The Compensation Committee reviews our remuneration policies and practices and makes recommendations to our board in connection with all compensation matters affecting our executive officers. Our Board of Directors has adopted a written charter for the Compensation Committee, a copy of which is available at our website at http://www.gkservices.com.

Ability of Shareholders to Communicate with the Company’s Board of Directors

We have established means for shareholders and others to communicate with our Board of Directors. If a shareholder wishes to address a matter regarding our financial statements, accounting practices or internal controls, the matter should be submitted in writing addressed to the Chair of the Audit Committee in care of the Corporate Secretary at our headquarters address. If the matter relates to our governance practices, business ethics or corporate conduct, it should be submitted in writing addressed to the Chair of the Corporate Governance Committee in care of the Corporate Secretary at our headquarters address. If a shareholder is unsure where to direct a communication, the shareholder may direct it in writing to the Chair of the Board of Directors, or to any one of the independent directors of the company, in care of the Corporate Secretary at our headquarters address. These shareholder communications will be forwarded by the Corporate Secretary to the appropriate addressee.

Report of the Audit Committee

The Audit Committee has reviewed our audited consolidated financial statements for the last fiscal year, and has discussed them with management and the independent registered public accounting firm.

Specifically, the Audit Committee has discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants.

The Audit Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by Independence Standard No. 1, Independence Discussions with Audit Committees, as amended, by the Independence Standards Board, and has discussed with the auditors their independence, including a consideration of the compatibility of non-audit services with such independence.

The Audit Committee, based on the review and discussions described above with management and Ernst & Young LLP, has recommended to our Board of Directors, which adopted this recommendation, that the audited consolidated financial statements be included in our annual report on Form 10-K for fiscal 2007 for filing with the Securities and Exchange Commission.

As reported:

Alice M. Richter
Michael G. Allen
Ernest J. Mrozek

The Audit Committee Report set forth above will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate such reports by reference, and such report will not otherwise be deemed to be soliciting materials or to be filed under such acts.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee was during fiscal 2007 an officer, former officer or employee of the company or any of its subsidiaries. During fiscal 2007, no executive officer of the company served as a member of (i) the compensation committee of another entity, one of whose executive officers served on the compensation committee of our Board of Directors, (ii) the board of directors of another entity, one of whose executive officers served on the Compensation Committee of our Board of Directors, or (iii) the compensation committee (or other board committee performing equivalent functions, or in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a member of our board of directors.

Report of the Corporate Governance Committee

Composition

The Corporate Governance Committee of our Board of Directors is comprised of three directors, each of whom meets the definition of “independence” set forth in the NASDAQ’s corporate governance listing standards. The Corporate Governance Committee has one member in common with the Compensation Committee. The Chair and members of the Corporate Governance Committee are appointed annually by the Board of Directors at the annual organizational meeting of the board.

Responsibilities

The Governance Committee is responsible for monitoring the effectiveness of our Board of Directors in carrying out its responsibilities to:

	•		represent and protect the interests of shareholders;
	•		assure appropriate board composition;
	•		choose a Chief Executive Officer and assess his or her performance;
	•		assure that succession plans for senior management are developed and implemented;
	•		provide general advice and counsel to management of the company;
	•		review and approve strategic plans; and
	•		have board meetings that are well organized, focus on strategic issues, encourage open and frank discussion, and provide useful contributions from the board members.

A complete description of the committee’s responsibilities can be found in its charter.

The Governance Committee oversaw an effective corporate governance structure during the 2007 fiscal year, including

	•		implementing the board’s Corporate Governance Guidelines and Directors’ Code of Conduct;
	•		working with the Compensation Committee on an effective process for evaluation of the company’s Chief Executive Officer;
	•		executing and acting upon board evaluations;
	•		maintaining the Governance Committee charter, and reviewing charters of the various other board committees;
	•		reviewing the company’s legal compliance and ethics program; and
	•		determining the committee structure and membership of the board, and establishing a practice regarding rotation of committee membership.