UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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Deluxe Corporation (Name of Registrant as Specified In Its Charter)

 

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		Deluxe Corporation 3680 Victoria Street N. Shoreview, MN 55126-2966 P.O. Box 64235 St. Paul, MN 55164-0235 www.deluxe.com

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 2009

To the Shareholders of Deluxe Corporation:

     The 2009 annual meeting of shareholders will be held at the Deluxe Corporation headquarters located at 3680 Victoria Street North, Shoreview, Minnesota on Wednesday, April 29, 2009, at 2:00 p.m. Central Time for the following purposes:

	1.		To elect ten directors to hold office until the 2010 annual meeting of shareholders.
	2.		To consider and act upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2009.
	3.		To take action on any other business that may properly come before the meeting and any adjournment thereof.

     Shareholders of record at the close of business on March 4, 2009, are entitled to vote at the meeting and at any adjournment thereof.

     Once again, we are furnishing proxy materials to our shareholders over the Internet. This process expedites the delivery of proxy materials, reduces paper waste and saves the company expense. In addition, these materials remain easily accessible, and shareholders receive clear instructions for voting and requesting paper copies of the materials if they so desire.

     We are mailing the Notice of Internet Availability of Proxy Materials (“Internet Notice”) to shareholders on or about March 18, 2009. The Internet Notice contains instructions on how to access our Proxy Statement and Annual Report, and how to vote online. In addition, the Internet Notice contains instructions on how you may (i) receive a paper copy of the Proxy Statement and Annual Report, if you received only an Internet Notice this year, or (ii) elect to receive your Proxy Statement and Annual Report only over the Internet, if you received them by mail this year.

     It is important that your shares be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting in person, please vote as soon as possible to ensure the presence of a quorum and save Deluxe further expense. You may vote your shares over the Internet. If you received a paper copy of the proxy card by mail, you may sign, date and mail the proxy card in the envelope provided. Instructions regarding the methods of voting are contained in the Internet Notice and in the Proxy Statement. Voting over the Internet or by mailing a proxy card will not limit your right to vote in person or to attend the Annual Meeting.

     March 11, 2009

DELUXE CORPORATION

3680 Victoria Street N., Shoreview, Minnesota 55126-2966

Proxy Statement
2009 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 2009

TABLE OF CONTENTS

INFORMATION CONCERNING SOLICITATION AND VOTING
What is the purpose of the annual meeting?			3
How does the Board recommend that I vote?			3
Who is entitled to vote at the meeting?			3
How many shares must be present to hold the meeting?			3
What is the difference between a shareholder of record and a “street name” holder?			3
How do I vote my shares?			4
What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials?			4
Can I vote my shares in person at the meeting?			4
What vote is required to elect directors?			5
What vote is required on proposals other than the election of directors?			5
How are votes counted?			5
What if I do not specify how I want my shares voted?			5
Can I change my vote?			5
Who pays the cost of proxy preparation and solicitation?			5
STOCK OWNERSHIP AND REPORTING
Director and Executive Officer Stock Ownership and Sale Guidelines			6
Security Ownership of Certain Beneficial Owners and Management			6
Section 16(a) Beneficial Ownership Reporting Compliance			8
ITEM 1: ELECTION OF DIRECTORS			8
BOARD STRUCTURE AND GOVERNANCE
Board Oversight and Director Independence			12
Related Party Transaction Policy and Procedures			13
Meetings and Committees of the Board of Directors			13
Audit Committee			14
Compensation Committee			15
Corporate Governance Committee			15
Finance Committee			16
Corporate Governance Principles			16
Code of Ethics and Business Conduct			16
Board Composition and Qualifications			16
Director Selection Process			17
Non-Executive Chairman; Executive Sessions			18
Communications with Directors			18
Audit Committee Expertise; Complaint-Handling Procedures			18

Compensation Committee Processes and Procedures			19
Compensation Committee Interlocks and Insider Participation			19
Non-Employee Director Compensation			19
Director Compensation Table for 2008			21
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis			22
Compensation Committee Report			30
Executive Compensation Tables			31
Summary Compensation Table			32
Other Compensation Supplemental Table			34
Grants of Plan-Based Awards in 2008			35
Outstanding Equity Awards at 2008 Fiscal Year-End			36
2008 Option Exercises and Stock Vested			38
Deferred Compensation Plan			39
Non-Qualified Deferred Compensation Table			39
Severance, Retention and Change of Control Arrangements			40
Severance Calculations Table			42
Change of Control Calculation Tables			43
FISCAL YEAR 2008 AUDIT AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Committee Report			46
Fees Paid to Independent Registered Public Accounting Firm			47
Policy on Audit Committee Pre-Approval of Accounting Firm Fees and Services			47
ITEM 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			48
2010 SHAREHOLDER PROPOSALS			48
OTHER BUSINESS			48
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K			49

INFORMATION CONCERNING SOLICITATION AND VOTING

What is the purpose of the annual meeting?

     At our annual meeting, shareholders will act on the matters disclosed in the Notice of Annual Meeting of Shareholders that preceded this proxy statement. The two proposals scheduled to be voted on at the meeting are to:

	•		Elect ten directors; and
	•		Ratify the appointment of PricewaterhouseCoopers LLP as Deluxe’s independent registered public accounting firm.

     We will also consider any other business that may be properly presented at the meeting (although we are not expecting any other matters to be presented), and management will report on Deluxe’s performance during the last fiscal year and respond to questions from shareholders.

     The Board of Directors of Deluxe is asking you to vote on the proposed items of business.

How does the Board recommend that I vote?

     The Board of Directors recommends a vote:

	•		FOR all of the nominees for director; and
	•		FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Deluxe’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

Who is entitled to vote at the meeting?

     The Board has set March 4, 2009, as the record date for the meeting. If you were a shareholder of record at the close of business on March 4, 2009, you are entitled to vote at the meeting. You have one vote for each share of common stock you held on the record date.

     As of the record date, 51,110,155 shares of Deluxe common stock were outstanding. Deluxe does not have any other class of capital stock outstanding.

How many shares must be present to hold the meeting?

     A quorum is necessary to hold the meeting and conduct business. The presence of shareholders who can direct the vote (with respect to the election of directors) of at least a majority of the outstanding shares of common stock as of the record date is considered a quorum. A shareholder is counted present at the meeting if:

	•		the shareholder is present and votes in person at the meeting; or
	•		the shareholder has properly submitted a proxy or voted by telephone or through the Internet.

What is the difference between a shareholder of record and a “street name” holder?

     If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares.

     If your shares are held in a stock brokerage account or by a bank or other nominee, you are still considered the beneficial owner of the shares, but your shares are held in “street name”.

How do I vote my shares?

     We are mailing the Notice of Internet Availability of Proxy Materials (the “Internet Notice”) to shareholders of record on or about March 18, 2009. You will not receive a printed copy of these proxy materials unless you request to receive these materials in hard copy by following the instructions provided in the Internet Notice. Instead, the Internet Notice will instruct you how you may access and review all of the important information contained in these proxy materials. The Internet Notice also instructs you how you may submit your proxy via the Internet. If you received an Internet Notice by mail and would like to receive a printed copy of these proxy materials, you should follow the instructions for requesting such materials included in the Internet Notice.

     Via the Internet — You can simplify your voting by voting your shares via the Internet as instructed in the Internet Notice. The Internet procedures are designed to authenticate your identity, to allow you to vote your shares and confirm that your instructions have been property recorded. Internet voting facilities for shareholders of record are available 24 hours a day and will close at 11:59 p.m. (CT) on April 28, 2009. You may access this Proxy Statement and related materials by going to http://www.investoreconnect.com and entering the control number as shown on your Internet Notice. You will then be directed to select a link to www.proxyvote.com where you will be able to vote on the proposals presented here.

     By Mail — Shareholders who receive a paper proxy card may elect to vote by mail (instead of by Internet or telephone) and should complete, sign and date their proxy card and mail it in the pre-addressed envelope that accompanies the paper proxy card. Proxy cards submitted by mail must be received by the time of the Annual Meeting in order for your shares to be voted. Shareholders who hold shares beneficially in street name may vote by mail by requesting a paper proxy card according to the instructions contained in the Internet Notice received from your broker or other agent, and then completing, signing and dating the voting instructions card provided by the broker or other agent and mailing it in the pre-addressed envelope provided.

     By Telephone — Shareholders may also elect to vote over the telephone by calling 800-690-6903 (toll-free). The telephone voting procedures have been set up for your convenience. The procedures have been designed to verify your identity, to allow you to give voting instructions and to confirm that those instructions have been recorded properly.

What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials?

     It means you hold shares registered in more than one account. To ensure that all of your shares are voted, if you vote by telephone or through the Internet, vote once for each Internet Notice you receive. If you wish to consolidate your accounts, please contact our stock transfer agent, Wells Fargo Bank, N.A., at P.O. Box 64854, St. Paul, Minnesota 55164 or by telephone at 800-468-9716 (toll-free).

     You may also receive a “voting instructions” card which looks very similar to a proxy card. Voting instructions are prepared by brokers, banks or other nominees for shareholders who hold shares in street name.

Can I vote my shares in person at the meeting?

     Yes. If you are a shareholder of record, you may vote your shares at the meeting by completing a ballot at the meeting. However, even if you currently plan to attend the meeting, we recommend that you submit your proxy ahead of time so that your vote will be counted if, for whatever reason, you later decide not to attend the meeting.

     If you hold your shares in street name, you may vote your shares in person at the meeting only if you obtain a signed proxy from your broker, bank or other nominee giving you the right to vote such shares at the meeting.

What vote is required to elect directors?

     In accordance with Minnesota law, directors are elected by a plurality of votes cast. This means that the ten nominees receiving the highest number of votes will be elected, provided that a quorum is present at the meeting.

What vote is required on proposals other than the election of directors?

     With respect to each item of business to be voted on at the meeting other than the election of directors, the affirmative vote of a majority of the shares present and entitled to vote with respect to that item is required for the approval of the item (provided that the total number of shares voted in favor of the proposal constitutes more than 25 percent of the outstanding shares).

How are votes counted?

     Shareholders may either vote “FOR” or “WITHHOLD” authority to vote for the nominees for the Board of Directors. Shareholders may also vote “FOR,” “AGAINST” or “ABSTAIN” on the other proposals.

     If you vote WITHHOLD or ABSTAIN, your shares will be counted as present at the meeting for the purposes of determining a quorum.

     If you WITHHOLD authority to vote for one or more of the directors, this has the same effect as a vote against the director or directors for which you WITHHOLD your authority. If you ABSTAIN from voting on a proposal, your abstention has the same effect as a vote against the proposal.

What if I do not specify how I want my shares voted?

     If you hold your shares in street name and do not provide voting instructions to your broker, your shares will be counted as present at the meeting for purposes of determining a quorum and, in accordance with applicable law and the rules of the New York Stock Exchange, may be voted on Item 1: Election of Directors and Item 2: Ratification of Appointment of Independent Registered Public Accounting Firm, at the discretion of your broker. Shares will not be voted on any proposal for which your broker does not have discretionary authority to vote unless you provide voting instructions.

     If you vote your shares directly (as opposed to voting through a broker or other intermediary) and do not specify on your proxy card (or when giving your proxy by telephone or via the Internet) how you want to vote your shares, we will vote them:

	•		FOR the election of all of the nominees for director; and
	•		FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Deluxe’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

Can I change my vote?

     Yes. You can change your vote and revoke your proxy at any time before it is voted at the meeting in any of the following ways:

	•		by sending a written notice of revocation to Deluxe’s Corporate Secretary;
	•		by submitting another properly signed proxy card at a later date to the Corporate Secretary;
	•		by submitting another proxy by telephone or through the Internet at a later date; or
	•		by voting in person at the meeting.

Who pays the cost of proxy preparation and solicitation?

     Deluxe pays for the cost of proxy preparation and solicitation, including the charges and expenses of brokerage firms or other nominees for forwarding proxy materials to beneficial owners. We have retained Georgeson Shareholder Communications, Inc., a proxy solicitation firm, to assist in the solicitation of proxies for a fee of approximately $7,500, plus associated costs and expenses.

     We are soliciting proxies primarily by use of the Internet. In addition, proxies may be solicited by mail, telephone or facsimile, or personally by directors, officers and regular employees of Deluxe. These individuals receive no additional compensation beyond their regular salaries for these services.

STOCK OWNERSHIP AND REPORTING

Director and Executive Officer Stock Ownership and Sale Guidelines

     The Board has established stock ownership guidelines for directors and executive officers. These guidelines set ownership targets for each director and officer, with the expectation that the target be achieved within five years of the later of the date the ownership guidelines were implemented or the individual first became a director or officer, whichever is applicable. The Board also maintains guidelines restricting a director’s or officer’s ability to sell shares received upon the exercise of options or vesting of other stock-based awards until they have achieved their ownership targets. The ownership target for non-employee directors is shares having a value of at least five times the current Board retainer. Executive officers have targets based on a multiple of their annual base salary. The ownership target for the Chief Executive Officer (“CEO”) is five times his annual base salary, the target for the Company’s Senior Vice Presidents is two times their annual base salary, and the target for the Company’s Vice Presidents who are members of the Company’s Executive Leadership Team is one and one-half times their annual base salary.

Security Ownership of Certain Beneficial Owners and Management

     The following table shows, as of March 4, 2009 (unless otherwise noted), the number of shares of common stock beneficially owned by (1) each person who is known by Deluxe to beneficially own more than five percent of Deluxe’s outstanding common stock, (2) each executive officer named in the Summary Compensation Table that appears on page 32 in this proxy statement (each, a “Named Executive Officer”), (3) each director and nominee for director, and (4) all of the current directors and executive officers of Deluxe as a group. Except as otherwise indicated in the footnotes below, the shareholders listed in the table have sole voting and investment powers with respect to the common stock owned by them.

		Amount and Nature
		of Beneficial
Name of Beneficial Owner		Ownership				Percent of Class
Barclays 1			6,863,688				13.42
Lee J. Schram 2			453,043				*
Richard S. Greene 3			64,529				*
Anthony C. Scarfone 4			194,999				*
Terry D. Peterson 5			38,291				*
Thomas Morefield 6			38,117				*
Luann E. Widener 7			177,579				*
Leanne E. Branham 8			53,717				*
Ronald C. Baldwin 9			8,585				*
Charles A. Haggerty 10			53,795				*

		Amount and Nature
		of Beneficial
Name of Beneficial Owner		Ownership				Percent of Class
Isaiah Harris, Jr. 11			16,936				*
Don J. McGrath 12			13,693				*
Cheryl E. Mayberry McKissack 13			18,675				*
Neil J. Metviner 14			6,585				*
Stephen P. Nachtsheim 15			48,315				*
Mary Ann O’Dwyer 16			25,026				*
Martyn R. Redgrave 17			29,346				*
All directors, nominees and executive officers as a group (19 persons) 18			1,111,924				2.15

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and related regulations, require Deluxe’s directors and executive officers, and any persons holding more than ten percent of Deluxe’s common stock (collectively, “Reporting Persons”), to report their initial ownership of Deluxe securities and any subsequent changes in that ownership to the Securities and Exchange Commission. Based on our review of the reports filed and written representations submitted by the Reporting Persons, we believe that all Reporting Persons timely filed all required Section 16(a) reports for the most recent fiscal year.

ITEM 1: ELECTION OF DIRECTORS

Nominees for Election

     There are currently ten individuals serving on the Board of Directors. As of the date of the meeting the Board has set the size of the Board at ten directors and recommends that the ten individuals presented on the following pages be elected to serve on the Board until the 2010 annual meeting of shareholders. All of the nominees are current directors. In addition, with the exception of Mr. Schram, who serves as Deluxe’s CEO and therefore cannot be deemed independent, all nominees have been determined by the Board to meet the independence standards of the New York Stock Exchange (see the discussion of Director Independence in the “BOARD STRUCTURE AND GOVERNANCE” section of this proxy statement).

     Each of the ten individuals listed has consented to being named as a nominee in this proxy statement and has indicated a willingness to serve if elected. However, if any nominee becomes unable to serve before the election, the shares represented by proxies may be voted for a substitute designated by the Board, unless a contrary instruction is indicated on the proxy.

RONALD C. BALDWIN
Director Since June 2007

Age 62

Vice Chairman (Retired), Huntington Bancshares Inc.

Mr. Baldwin served as Vice Chairman of Huntington Bancshares Inc. from April 2001 until his retirement in December 2006. Huntington is a regional bank holding company, and Mr. Baldwin was responsible for overseeing Huntington’s regional banking line of business, which provided both commercial and retail financial products and services through nearly 400 regional banking offices. Mr. Baldwin is a 35-year veteran of the banking and financial services industry.

CHARLES A. HAGGERTY
Director Since December 2000

Age 67

Chairman (Retired), Western Digital Corporation

Mr. Haggerty was Chairman of the Board of Western Digital Corporation from July 1993 until his retirement in June 2000. Mr. Haggerty was also Chief Executive Officer of Western Digital from July 1993 to January 2000, and was President from June 1992 to July 1993. Western Digital is a manufacturer of hard disk drives. Prior to joining Western Digital, Mr. Haggerty spent more than 28 years with IBM. Mr. Haggerty also serves as a director of Beckman Coulter, Inc., Pentair, Inc., Imation Corp and LSI Corporation.

ISAIAH HARRIS, JR.
Director Since August 2004

Age 56

President (Retired), BellSouth Advertising & Publishing Group

Prior to the December 29, 2006, acquisition of BellSouth Corporation (“BellSouth”) by AT&T Corp., Mr. Harris served as President of BellSouth Advertising & Publishing Group (“A&P”), a subsidiary of BellSouth, a position he assumed in December 2004. A&P was responsible for the marketing and publishing of The Real Yellow Pages® from BellSouth, and included BellSouth Advertising & Publishing Corporation, The Berry Company, Stevens Graphics and IntelliVentures. Mr. Harris also was responsible for the corporation’s Asian and South American wireless telecommunications operations. Effective February 7, 2007, Mr. Harris resigned from AT&T. He joined BellSouth in 1997, and during his tenure there held various executive positions, including President of BellSouth Enterprises from January to December 2004, President of Consumer Services from September 2000 to December 2003, and Vice President of Finance from January to September 2000. Mr. Harris also serves as a director of CIGNA Corporation and serves on the Advisory Board of the Board of Trustees of Wells Fargo Advantage Funds.

DON J. McGRATH
Director Since June 2007

Age 60

Chairman and Chief Executive Officer, BancWest Corporation

BancWest is a $70 billion bank holding company serving nearly four million households and businesses, and is a wholly-owned subsidiary of BNP Paribas, a European leader in banking and financial services. Mr. McGrath has served as BancWest’s Chairman and CEO since January 2005 and as a director since 1998. Prior to becoming CEO, he served as BancWest’s President and Chief Operating Officer, from November 1998 to December 2004. Mr. McGrath served as CEO of Bank of the West from 1996 through the end of 2007 and currently serves as Chairman of the Bank of the West and Vice Chairman of First Hawaiian Bank, both of which are subsidiaries of BancWest. In 2008, Mr. McGrath received a Presidential appointment to the President’s Council on Financial Literacy. He has nearly 40 years of experience in the banking and financial services industry.

CHERYL E. MAYBERRY McKISSACK
Director Since December 2000

Age 53

President and Chief Executive Officer, Nia Enterprises, LLC

Nia Enterprises, LLC is an interactive communications company for research services and diversity marketing, which Ms. Mayberry McKissack founded in 2000. From November 1997 to November 2000, Ms. Mayberry McKissack served as Senior Vice President and General Manager of worldwide sales and marketing for Open Port Technology, Inc., a provider of Internet infrastructure messaging solutions. Ms. Mayberry McKissack also serves as a director of Private Bancorp, Inc.

NEIL J. METVINER
Director Since June 2007

Age 50

Vice President, Pitney Bowes, Inc., and President, Global Mailstream, Europe

Pitney Bowes is a global mailstream technology company serving nearly one million small businesses in North America and over two million customers worldwide. Mr. Metviner joined Pitney Bowes in 2000 as President of Pitney Bowes Direct, having management responsibility for serving the company’s U.S. small business customer base, together with various international markets. In September 2007, Mr. Metviner assumed full oversight responsibility for the company’s European mailing operations.

STEPHEN P. NACHTSHEIM
Director Since November 1995

Age 64

Non-Executive Chairman of Deluxe and Vice President (Retired), Intel Corporation

In November 2005, Mr. Nachtsheim was appointed Non-Executive Chairman of the Board of Deluxe. Prior to that, he served as the Board’s Lead Independent Director, a role he had assumed in December 2003. Mr. Nachtsheim was a Corporate Vice President of Intel Corporation, a designer and manufacturer of integrated circuits, microprocessors and other electronic components, and the co-director of Intel Capital from 1998 until his retirement in August 2001.

MARY ANN O’DWYER
Director Since October 2003

Age 53

Senior Vice President — Finance and Operations and Chief Financial Officer, Wheels, Inc.

Ms. O’Dwyer joined Wheels, Inc. in 1991 and has been their Chief Financial Officer since 1994. She also has held the position of Senior Vice President — Finance and Operations since 2000. Wheels, Inc. is a major provider of automotive fleet management services. Ms. O’Dwyer also serves as a director of Wheels, Inc. and its parent company, Frank Consolidated Enterprises.

MARTYN R. REDGRAVE
Director Since August 2001

Age 56

Executive Vice President and Chief Administrative Officer, Limited Brands, Inc.

Mr. Redgrave has served as Executive Vice President and Chief Administrative Officer of Limited Brands, Inc., since March 2005, and also served as Chief Financial Officer from January 2006 to May 2007. Limited Brands is one of the world’s leading personal care, beauty, intimate apparel and apparel specialty retailers. Prior to joining Limited Brands, Mr. Redgrave served for eleven years as the Executive Vice President-Finance and Chief Financial Officer of Carlson Companies, Inc., a worldwide provider of hospitality, travel and marketing services.

LEE J. SCHRAM
Director Since May 2006

Age 67

Chief Executive Officer of Deluxe

Mr. Schram became CEO of Deluxe Corporation on May 1, 2006. Prior to joining Deluxe, Mr. Schram served as senior vice president of NCR Corporation’s Retail Solutions Division, with responsibilities for NCR’s global retail store automation and point-of-sale solutions business, including development, engineering, marketing, sales, and support functions. Mr. Schram began his professional career with NCR Corporation in 1983, where he held a variety of positions of increasing responsibility that included both domestic and international assignments. From September 2000 to January 2002, he served as chief financial officer for the Retail and Financial Group. Thereafter, he became vice president and general manager of Payment and Imaging Solutions in NCR’s Financial Services Division, a position he held until March 2003, when he became senior vice president of the Retail Solutions Division.

     The Board of Directors recommends that you vote FOR the election of each nominee named on the preceding pages.

BOARD STRUCTURE AND GOVERNANCE

Board Oversight and Director Independence

     Deluxe’s business, property and affairs are managed under the general direction of our Board of Directors. In providing this oversight, the Board adheres to a set of Corporate Governance Guidelines designed to ensure that the Board has access to relevant information, and is structured and operates in a manner allowing it to exercise independent business judgment. The complete text of Deluxe’s Corporate Governance Guidelines is posted on the Investor Relations page of the Investors section of our website at www.deluxe.com under the “Corporate Governance” caption.

     A critical component of our corporate governance philosophy is that a majority of our directors, and preferably a substantial majority, be individuals who meet strict standards of independence, meaning that they have no relationship with Deluxe, directly or indirectly, that could impair their ability to make objective and informed judgments regarding all matters of significance to Deluxe and its shareholders. The listing standards of the New York Stock Exchange (“NYSE”) require that a majority of our directors be independent, and that our Corporate Governance, Audit and Compensation Committees be comprised entirely of independent directors. In order to be deemed independent, a director must be determined by the Board to have no material relationship with Deluxe other than as a director. In accordance with the NYSE listing standards, our Board has adopted formal Director Independence Standards setting forth the specific criteria by which the independence of our directors will be determined, including restrictions on the nature and extent of any affiliations directors and their immediate family members may have with Deluxe, its independent registered public accounting firm, or any commercial or not-for-profit entity with which Deluxe has a relationship. Consistent with regulations of the Securities and Exchange Commission (“SEC”), our Director Independence Standards also prohibit Audit Committee members from accepting, directly or indirectly, any consulting, advisory or other compensatory fee from Deluxe, other than in their capacity as Board or committee members. The complete text of our Director Independence Standards is

posted on the Investor Relations page of the Investors section of our website at www.deluxe.com under the “Corporate Governance” caption.

     The Board has determined that every director and nominee, with the exception of Mr. Schram, satisfies our Director Independence Standards. The Board also has determined that every member of its Corporate Governance, Audit and Compensation Committees is an independent director.

Related Party Transaction Policy and Procedures

     The Board maintains written procedures under which the Corporate Governance Committee is responsible for reviewing potential or actual conflicts of interest, including any proposed related party transactions and interlocking relationships between executives and Board members. The Committee will determine whether any such potential or actual conflicts would require disclosure under securities laws, cause a director to be disqualified from being deemed independent, or cause a transaction being considered by the Board to be voidable if the conflict were not disclosed. The Committee also will consider whether the proposed transaction would result in a violation of any law or be inappropriate in light of the nature and magnitude of any interest of the director or executive in the entity or transaction giving rise to the potential conflict.

     The Committee may take those actions it deems necessary, with the assistance of any advisors it deems appropriate, in considering potential conflicts of interest. While it is expected that in most instances the Committee can make the necessary determination, where required by state law or due to the significance of the issue, the matter will be referred to the full Board for resolution.

     In late 2008, a proposed commercial relationship with Wheels, Inc. was reviewed and approved under these procedures. Wheels, Inc. is a $1.5 billion company that provides automobile leasing, fleet management and related services. Deluxe selected Wheels, Inc. to provide these services as the result of a competitive bidding process in which several other service providers also participated. Under the terms of the arms-length contract governing this relationship, Deluxe’s aggregate annual payments to Wheels, Inc. are expected to be between two and three million dollars, which amount is well below the thresholds for independence established by the NYSE and provided for in our Director Independence Standards. (For 2008, approximately $17,000 was paid to Wheels, Inc. under this relationship, due to the timing of contract execution.) The relationship with Wheels, Inc. was pre-approved by the Board’s Corporate Governance Committee in accordance with its written Conflicts of Interest review policy, and was duly considered by the Board in making its determination that Ms. O’Dwyer is independent.

Meetings and Committees of the Board of Directors

     There were seven meetings of the Board of Directors in 2008, six of which were regular meetings. Each director attended, in person or by telephone, at least 75 percent of the aggregate of all meetings of the Board and its committees on which he or she served during the year. It is our policy that directors attend our annual shareholder meetings and all such directors are expected to be in attendance at this year’s meeting. All of the directors serving on the Board attended last year’s annual meeting of shareholders.

     The Board of Directors has four standing committees:

	•		Audit Committee;
	•		Compensation Committee;
	•		Corporate Governance Committee; and
	•		Finance Committee.

     Each of the Board committees has a written charter, approved by the Board, establishing the authority and responsibilities of the committee. Each committee’s charter is posted on the Investor Relations page of the Investors section of our website at www.deluxe.com under the “Corporate Governance” caption. A copy of each charter is available in print free of charge to any shareholder who submits a request to: Corporate Secretary, Deluxe Corporation, 3680 Victoria Street North, Shoreview, Minnesota 55126.

     The following tables provide a summary of each committee’s responsibilities, the number of meetings held by each committee during the last fiscal year and the names of the directors currently serving on the committee.

Audit Committee

Responsibilities

•		Appoints and replaces the independent registered public accounting firm, subject to ratification by our shareholders, and oversees the work of the independent registered public accounting firm.
•		Pre-approves all auditing services and permitted non-audit services to be performed by the independent registered public accounting firm, including related fees.
•		Reviews and discusses with management and the independent registered public accounting firm our annual audited financial statements and recommends to the Board whether the audited financial statements should be included in Deluxe’s Annual Report on Form 10-K.
•		Reviews and discusses with management and the independent registered public accounting firm our quarterly financial statements and the associated earnings news releases.
•		Reviews and discusses with management and the independent registered public accounting firm significant reporting issues and judgments relating to the preparation of our financial statements, including the adequacy of internal controls.
•		Reviews and discusses with the independent registered public accounting firm our critical accounting policies and practices, alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, and other material written communications between the independent registered public accounting firm and management.
•		Oversees the work of our internal auditors.
•		Reviews the effectiveness of Deluxe’s legal and ethical compliance programs and maintains procedures for receiving, retaining and handling complaints by employees regarding accounting, internal controls and auditing matters.

Number of meetings in 2008: 9

Directors who serve on the committee:

Martyn R. Redgrave, Chair
Ronald C. Baldwin
Isaiah Harris, Jr.
Cheryl E. Mayberry McKissack
Mary Ann O’Dwyer

Compensation Committee

Responsibilities

•

Develops our executive compensation philosophy.

•

Evaluates and recommends incentive compensation plans for executive officers and other key managers, and all equity-based compensation plans, and oversees the administration of these and other employee compensation and benefit plans.

•

Reviews and approves corporate goals and objectives relating to the CEO’s compensation, leads an annual evaluation of the CEO’s performance in light of those goals and objectives, and determines, in conjunction with the Board, the CEO’s compensation based on this evaluation.

•

Reviews and approves other executive officers’ compensation.

•

Establishes and certifies attainment of incentive compensation goals and performance measurements applicable to our executive officers.

Number of meetings in 2008: 6

Directors who serve on the committee:

Charles A. Haggerty, Chair
Don J. McGrath
Neil J. Metviner
Stephen P. Nachtsheim

Corporate Governance Committee

Responsibilities

•

Reviews and recommends the size and composition of the Board, including the mix of management and independent directors.

•

Establishes criteria and procedures for identifying and evaluating potential Board candidates.

•

Reviews nominations received from the Board or shareholders, and recommends candidates for election to the Board.

•

Establishes policies and procedures to ensure the effectiveness of the Board, including policies regarding term limits, review of qualifications of incumbent directors, and conflicts of interest.

•

Establishes guidelines for conducting Board meetings.

•

Oversees the annual assessment of the Board’s performance.

•

In consultation with the Compensation Committee, reviews and recommends to the Board the amount and form of all compensation paid to directors.

•

Recommends to the Board the size, composition and responsibilities of all Board committees.

•

Reviews and recommends candidates for key executive officer positions and monitors management succession plans.

•

Develops and recommends corporate governance guidelines, policies and procedures.

Number of meetings in 2008: 4

Directors who serve on the committee:

Cheryl E. Mayberry McKissack, Chair
Isaiah Harris, Jr.
Don J. McGrath
Stephen P. Nachtsheim

Finance Committee

Responsibilities

•

Evaluates acquisitions, divestitures and capital projects in excess of $5 million, and reviews other material financial transactions outside the scope of normal on-going business activity.

•

Reviews and approves the Company’s annual financing plans, as well as credit facilities maintained by the Company.

•

Reviews and recommends policies concerning corporate finance matters, including capitalization, investment of assets and debt/equity guidelines.

•

Reviews and recommends dividend policy and approves declarations of regular shareholder dividends.

•

Reviews and makes recommendations to the Board regarding financial strategy and proposals concerning the sale, repurchase or split of Deluxe securities.

Number of meetings in 2008: 6

Directors who serve on the committee:

Mary Ann O’Dwyer, Chair
Ronald C. Baldwin
Charles A. Haggerty
Neil J. Metviner
Martyn R. Redgrave

Corporate Governance Principles

     As indicated above, our Board has adopted a set of Corporate Governance Guidelines to assist it in carrying out its oversight responsibilities. These Guidelines address a broad range of topics, including director qualifications, director nomination processes, term limits, Board and committee structure and process, Board evaluations, director education, CEO evaluation, management succession planning and conflicts of interest. The complete text of the Guidelines is posted on the Investor Relations page of the Investors section of our website at www.deluxe.com under the “Corporate Governance” caption. A copy of the Guidelines is available in print free of charge to any shareholder who submits a request to: Corporate Secretary, Deluxe Corporation, 3680 Victoria Street North, Shoreview, Minnesota 55126.

Code of Ethics and Business Conduct

     All of our directors and employees, including our CEO, Chief Financial Officer, Chief Accounting Officer and other executives, are required to comply with our Code of Ethics and Business Conduct (“Code of Ethics”) to help ensure that our business is conducted in accordance with the highest legal and ethical standards. Our Code of Ethics requires strict adherence to the letter and spirit of all laws and regulations applicable to our business and covers all areas of professional conduct, including customer relationships, respect for co-workers, conflicts of interest, insider trading, the integrity of our financial recordkeeping and reporting, and the protection of our intellectual property and confidential information. Employees are required to bring any violations and suspected violations of the Code of Ethics to Deluxe’s attention through management or Deluxe’s law department, or by using our confidential compliance hotline.

     The full text of our Code of Ethics is posted on the Investor Relations page of the Investors section of our website at www.deluxe.com under the “Corporate Governance” caption. The Code of Ethics is available in print free of charge to any shareholder who submits a request to: Corporate Secretary, Deluxe Corporation, 3680 Victoria Street North, Shoreview, Minnesota 55126.

Board Composition and Qualifications

     Our Corporate Governance Committee oversees the process for identifying and evaluating candidates for the Board of Directors. Directors and nominees for director should have diverse backgrounds and possess the qualifications, experience and knowledge to enable them to contribute effectively to the evaluation of our business strategies and to the Board’s oversight role. The Corporate Governance Committee believes that a predominance of Board members should have a background in business and should include both actively employed and retired senior corporate officers, and that directors should range in age so as to maintain a sound balance of board tenure and experience, as well as staggered retirement dates.

     The Board of Directors has established the following specific guidelines for nominees to the Board:

	•		A majority of the Board must be comprised of independent directors, the current standards for which are discussed above under “Board Oversight and Director Independence.”
	•		As a general rule, non-employees should not be nominated for re-election to the Board after their 72nd birthday or having served for 12 years from their initial election to the Board, although the Board retains the ability to grant exemptions to these limits where it determines that such an exemption will serve the interests of Deluxe and its shareholders.
	•		A non-employee director who ceases to hold the employment position held at the time of election to the Board, or who has a significant change in position, should offer to resign. The Corporate Governance Committee will then consider whether the change of status is likely to impact the director’s qualifications and make a recommendation to the Board as to whether the resignation should be accepted.
	•		Management directors who terminate employment with Deluxe should offer to resign. The Board will then decide whether to accept the director’s resignation, provided that no more than one former CEO should serve on the Board at any one time.

     Other selection criteria used to evaluate potential candidates may include successful senior level business management experience or experience that fulfills a specific need, prior experience and proven accomplishment as a director of a public company, commitment to attending Board and committee meetings, a reputation for honesty and integrity, interest in serving the needs of shareholders, employees and communities in which we operate, and compatibility with existing directors.

Director Selection Process

     All Board members are elected annually by our shareholders, subject to the Board’s right to fill vacancies in existing or new director positions on an interim basis. Based on advice from the Corporate Governance Committee, each year the Board recommends a slate of directors to be presented for election at the annual meeting of shareholders.

     The Corporate Governance Committee considers candidates recommended by members of the Board or recommended by our shareholders, and the Committee reviews such candidates in accordance with our bylaws and applicable legal and regulatory requirements. Candidates recommended by our shareholders are evaluated in accordance with the same criteria and using the same procedures as candidates recommended by Board members or the CEO. In order for such shareholder recommendations to be considered, shareholders must provide the Corporate Governance Committee with sufficient written documentation to permit a determination by the Board as to whether such candidate meets the required and desired director selection criteria set forth in our bylaws and our Corporate Governance Guidelines and as outlined below. Such documentation and the name of the recommended director candidate must be sent by U.S. mail to our Corporate Secretary at the address indicated on the Notice of Annual Meeting of Shareholders. Our Corporate Secretary will send properly submitted shareholder recommendations to the Chair of the Corporate Governance Committee for consideration at a future committee meeting.

     When a vacancy or a new position on the Board needs to be filled, the CEO, in consultation with the Chair of the Corporate Governance Committee, drafts a profile of the candidate he or she believes would provide the most meaningful contributions to the Board as a whole. The profile is submitted to the Committee for approval. In order to properly staff its various committees and support its succession planning initiatives, the Board currently believes that a Board consisting of nine to eleven directors is the optimal size. The Committee has made it a practice in recent years to engage third-party search firms to assist it in identifying suitable candidates. The firms selected, as well as the specific terms of the engagement, are based on the specific search criteria established by the Committee. Members of the Board also are given the opportunity to submit names of potential candidates based on the profile developed. Each candidate is subject to an initial screening process after which the Committee selects

the candidates that it wishes to interview. The Chair of the Board, CEO and at least a majority of the Committee interviews each candidate and, concurrently with the interviews, the candidate will confirm his or her availability for regularly scheduled Board and committee meetings. The Committee will also assess each candidate’s potential conflicts of interest. The Committee reviews the interviewers’ reports and recommendations, and makes the final determination as to which candidates are recommended for election to the Board. Depending on when suitable candidates are identified, the Board may decide to appoint a new director to serve on the Board until the next annual meeting of shareholders.

     Our bylaws require that if a shareholder wishes to nominate a candidate at the annual meeting of shareholders, the shareholder must give written notice of the nomination to our CEO or Corporate Secretary no later than 120 days prior to the first anniversary of the previous year’s annual meeting. The shareholder must attend the meeting with the candidate and propose the candidate’s nomination for election to the Board at the meeting. The shareholder’s notice must set forth as to each nominee: (1) the name, age, business address and residence address of the person, (2) the principal occupation or employment of the person, (3) the number of shares of our stock owned by the person, (4) the written and acknowledged statement of the person that such person is willing to serve as a director, and (5) any other information relating to the person that would be required to be disclosed in a solicitation of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, if the candidate had been nominated by or on behalf of the Board. No shareholders submitted director nominations in connection with this year’s meeting. Any shareholders desiring to present a candidate at the 2010 annual meeting of shareholders must furnish the required notice no later than December 30, 2009.

Non-Executive Chairman; Executive Sessions

     Mr. Nachtsheim is the Non-Executive Chairman of the Board and is expected to serve until such time as a new Chair is elected by the Board. Although Mr. Nachtsheim has served on the Board for more than 12 years, the Board determined that it would be in the best interests of Deluxe and its shareholders to re-nominate Mr. Nachtsheim to an additional term in order to provide continuity in the Chairman position in light of the recent addition of several new Board members, and to minimize the risk of distraction from a change in the Board leadership as Deluxe continues to execute its transformational initiatives and growth strategies. Mr. Nachtsheim’s duties include moderating meetings or executive sessions of the independent directors and acting as the principal liaison between the independent directors and the CEO with respect to Board governance issues. Our independent directors make it a practice to meet in executive session without management present at each Board meeting. Likewise, all Board committees regularly meet in executive session without management.

Communications with Directors

     Any interested party having concerns about our governance or business practices, or otherwise wishing to communicate with our independent directors, may submit their concerns in writing to the Non-Executive Chairman of the Board or the independent directors as a group in the care of the office of: Corporate Secretary, Deluxe Corporation, 3680 Victoria Street North, Shoreview, Minnesota 55126.

Audit Committee Expertise; Complaint-Handling Procedures

     In addition to meeting the independence requirements of the NYSE and the SEC, all members of the Audit Committee have been determined by the Board to meet the financial literacy requirements of the NYSE’s listing standards. The Board also has determined that at least one member of the Audit Committee, including Martyn Redgrave, the Committee Chair, is an “audit committee financial expert” as defined by SEC regulations.

     In accordance with federal law, the Audit Committee has adopted procedures governing the receipt, retention and handling of complaints regarding accounting and auditing matters. These procedures include a means for employees to submit concerns on a confidential and anonymous basis, through Deluxe’s compliance hotline.

Compensation Committee Processes and Procedures

     The authority and responsibilities of the Compensation Committee are governed by its charter, a copy of which can be found on Deluxe Corporation’s website at www.deluxe.com, together with applicable laws, rules, regulations and NYSE listing standards.

     The Compensation Committee is authorized to review and approve corporate goals and objectives related to the CEO’s compensation, lead the Board’s evaluation of the CEO’s performance in light of those goals and objectives, and determine the CEO’s compensation based on the evaluation and input from the Board as a whole. The Committee is expected to engage the entire Board in its evaluation of the CEO’s performance and appropriate level of compensation.

     The Committee also reviews and approves each executive officer’s base pay and incentive compensation levels, stock ownership targets, employment-related agreements and any special benefit plans or programs for executives. As part of this responsibility, the Committee evaluates and makes recommendations to the Board regarding the Company’s compensation philosophy and structure, the design of incentive compensation plans in which executives participate and all equity plans. It establishes incentive compensation goals and performance measurements for executives and determines the levels of achievement of each executive relative to the goals and measurements. Subject to limits imposed by the plans, applicable law and the Board, the Committee also oversees administration of equity-based plans, deferred compensation plans, benefit plans, retirement and Employee Retirement Income Security Act (“ERISA”) excess plans, and also is responsible for determining the formula used to calculate contributions to the company’s current profit sharing plan. The Committee has delegated to management committees the responsibility to administer broad-based benefit plans and the responsibility to oversee investment options and management of retirement and deferred compensation programs.

     Although matters of director compensation ultimately are the responsibility of the full Board, the Compensation Committee works in conjunction with the Board’s Corporate Governance Committee and its independent compensation consultants in evaluating director compensation levels, making recommendations regarding the structure of director compensation, and developing a director pay philosophy that is aligned with the interests of the Company’s shareholders.

     The Committee has the authority to engage compensation consultants to assist it in conducting the activities within its general scope of responsibility. Since 2001, the committee has retained Watson Wyatt Worldwide, Inc. as its independent consultant. The Committee has the sole authority to retain, terminate and approve the fees of a compensation consultant for the purpose of assisting in the evaluation of director, CEO and executive compensation.

Compensation Committee Interlocks and Insider Participation

     The Compensation Committee is comprised entirely of independent directors. No member of the Compensation Committee has been an officer or employee of Deluxe. None of our executives serve as a member of the Compensation Committee of any other company that has an executive serving as a member of the Deluxe Board of Directors. None of our executives serve as a member of the board of directors of any other company that has an executive serving as a member of the Compensation Committee.

Non-Employee Director Compensation

     Directors who are employees of Deluxe do not receive compensation for their service on the Board other than their compensation as employees. Non-employee directors each receive a $50,000 annual Board retainer, payable quarterly. For 2008, the Non-Executive Chairman received an incremental $100,000 annual retainer, payable quarterly.

     In order to fairly compensate non-employee directors for their service on Board committees, the elements and responsibilities of which will fluctuate from time to time, committee members are paid fees for each committee meeting attended, with the chair of each committee also receiving an annual retainer for serving as the chair.

     For 2008, the committee fee structure was as follows:

						Compensation				Other Standing
		Audit Committee				Committee				Committees
		($)				($)				($)
Chair Retainer			15,000				7,500				5,000
In-Person Meeting Attendance			2,000				1,500				1,500
Telephonic Meeting Attendance			1,000				750				750

     Non-employee directors also receive $1,500 for each approved site visit and director education program attended, up to a maximum of five per year, in the aggregate. Directors also may receive additional compensation for the performance of duties assigned by the Board or its committees that are considered beyond the scope of the ordinary responsibilities of directors or committee members.

     Deluxe maintains a Non-Employee Director Stock and Deferral Plan (the “Director Plan”), which was approved by shareholders as part of Deluxe’s 2008 Stock Incentive Plan (the “Stock Incentive Plan”). The purpose of the Director Plan is to provide an opportunity for non-employee directors to increase their ownership of Deluxe’s common stock and thereby align their interest in the long-term success of Deluxe with that of other shareholders. Under the Director Plan, each non-employee director may elect to receive, in lieu of cash retainers and fees, shares of Deluxe common stock having an equal value, based on the closing price of Deluxe’s stock on the NYSE as of the quarterly payment date. The shares of common stock receivable pursuant to the Director Plan are issued as of the quarterly payment date or, at the option of the director, credited to the director in the form of deferred restricted stock units. These restricted stock units vest and are converted into shares of common stock on the earlier of the tenth anniversary of February 1st of the year following the year in which the non-employee director ceases to serve on the Board or such other objectively determinable date as is elected by the director in his or her deferral election (for example, upon termination of service as a director). Each restricted stock unit entitles the holder to receive dividend equivalent payments equal to the dividend payment on one share of common stock. Any restricted stock units issued pursuant to the Director Plan will vest and be converted into shares of common stock in connection with certain defined changes of control of Deluxe. All shares of common stock issued pursuant to the Director Plan are issued under Deluxe’s Stock Incentive Plan and must be held by the non-employee director for a minimum period of six months from the date of issuance.

     Under the terms of the Stock Incentive Plan, non-employee directors also are eligible to receive other equity-based awards to further align their interests with shareholders and assist them in achieving and maintaining their established share ownership targets. Any stock options granted to non-employee directors must have an exercise price equal to the fair market value of Deluxe’s common stock on the date of grant, and no more than 5,000 options may be granted to a non-employee director in any one year. Non-employee directors did not receive any option grants in 2008, but each non-employee director elected to the Board at last year’s annual meeting did receive a grant of restricted stock on April 30, 2008, with an approximate grant date value of $70,000, which shares vest one year from the grant date. As new directors, Messrs. Baldwin, McGrath and Metviner received supplemental one-time grants in 2008 of restricted stock valued at $70,000, which also vest one year from the date of grant. Equity grants to directors are determined by the Compensation Committee, in consultation with the Corporate Governance Committee, as required by the Board’s governance processes.

     Non-employee directors who were elected to the Board prior to October 1997 also are eligible for certain retirement payments under the terms of a Board retirement plan that has since been replaced by the Director Plan. Under this predecessor plan, non-employee directors with at least five years of Board service who retire, resign or otherwise are not nominated for re-election are entitled to receive an annual payment equal to the annual Board retainer in effect on July 1, 1997 ($30,000 per year) for the number of years during which he or she served on the Board prior to October 31, 1997. As a result, no further benefits are accruing under this plan. In calculating a director’s eligibility for benefits under this plan, partial years of service are rounded up to the nearest whole number. Retirement payments do not extend beyond the lifetime of the retiree and are contingent upon the retiree’s remaining available for consultation with management and refraining from engaging in any activity in competition with Deluxe. Mr. Nachtsheim is the only current director eligible for benefits under this plan.

     The following table summarizes the compensation earned by each non-employee director during 2008.

DIRECTOR COMPENSATION FOR 2008

		Fees Earned or Paid				Stock				Option				All Other
		in Cash1				Awards2				Awards3				Compensation4				Total
Name		($)				($)				($)				($)				($)
Ronald C. Baldwin			72,250				93,395				0				3,293				168,938
Charles A. Haggerty			71,750				62,668				663				1,977				137,058
Isaiah Harris, Jr.			66,500				62,668				663				1,977				131,808
Cheryl E. Mayberry McKissack			77,500				62,668				663				1,977				142,808
Don J. McGrath			64,250				93,395				0				3,293				160,938
Neil J. Metviner			64,250				93,395				0				3,293				160,938
Stephen P. Nachtsheim			166,500				62,668				663				1,977				231,808
Mary Ann O’Dwyer			78,000				62,668				663				1,977				143,308
Martyn R. Redgrave			86,500				62,668				663				1,977				151,808

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

     The following discussion should be read in conjunction with the various tables and accompanying narrative disclosure appearing in this proxy statement. Those tables and narrative provide more detailed information regarding the compensation and benefits awarded to, earned by, or paid to our Chief Executive Officer (“CEO”) and the other executive officers named in the Summary Compensation Table appearing on page 32 (collectively, the “Named Executive Officers”), as well as the plans in which such officers are eligible to participate.

Executive Summary

     As explained in greater detail below, Deluxe maintains a strong pay-for-performance philosophy, with annual incentive payments (i.e., bonuses) being linked to the financial performance of the Company. Needless to say, the financial crisis and resulting downturn in the economy in 2008 had a negative impact on most businesses, including Deluxe. While Deluxe was able to manage through the downturn, the Company did not achieve its revenue and operating income targets for the year and, therefore, no bonuses were paid to the Named Executive Officers.

     As also discussed below, to properly balance Company management’s focus between short-term financial performance and long-term growth, and to further align management’s interests with those of the shareholders, a significant portion of each Executive’s overall compensation is comprised of long-term incentives, which for the past several years have been in the form of stock options and performance accelerated restricted stock. Executives also are subject to stock ownership guidelines and sale restrictions which require them to achieve and maintain significant ownership positions in Deluxe stock. Given the significant deterioration of the stock markets in 2008 sparked by the financial crisis, and the resulting decline in the price of Deluxe stock, the accumulated value of this long-term incentive compensation has likewise deteriorated. In fact, at the end of 2008, all outstanding stock options were below their respective exercise prices.

     In summary, while the compensation paid to the Named Executive Officers for 2008 clearly was aligned with the Company’s financial performance, it also creates challenges for the Company as it seeks to retain key employees who have experienced a significant reduction in both short- and long-term compensation due, in large measure, to general economic and market conditions. Like many companies, therefore, balancing pay-for-performance with the need to recruit and retain key talent clearly has been an area of focus for the Company’s Compensation Committee as it looks forward to 2009.

Compensation Objectives and Philosophy

          Deluxe is committed to providing executive compensation that attracts, motivates and retains the best possible executive talent for the benefit of our shareholders, supports Deluxe’s business objectives, and aligns the interests of the executive officers, including our Named Executive Officers, with the long-term interests of our shareholders. We believe these objectives are achieved by:

	•		Continually evaluating the competitiveness of our compensation programs relative to comparable organizations;
	•		Providing performance-based pay through annual incentive opportunities that are based on the achievement of specific business objectives (i.e., pay for performance);
	•		Providing equity-based incentives that promote the creation of long-term shareholder value;
	•		Delivering a significant portion of total compensation through performance-based pay linked to financial results and shareholder return; and
	•		Ensuring that the Named Executive Officers hold meaningful equity stakes in Deluxe.

Roles of Committee, Outside Compensation Advisors and Management in Compensation Decisions

          The Deluxe compensation program is designed to align all components of pay opportunity (base pay, annual incentive pay, long-term incentive pay, and benefits) at or near the median of the market, for each component and as a whole, and reward performance that meets or exceeds performance goals that are established, reviewed and approved each year by the Compensation Committee of the Board of Directors (sometimes referred to in this section as the “Committee”). In arriving at the appropriate levels of pay and incentive opportunities, the Committee also considers both whether the structure of the program rewards reasonable risk-taking and the overall cost of the compensation program so as to achieve proper balance between the need to reward employees and to deliver returns to Deluxe’s shareholders. Accordingly, the Committee annually reviews the proportion of operating income used to reward employee performance through incentive plan payments.

          The Committee has responsibility for guiding our executive compensation philosophy and overseeing the design of executive compensation programs. The Committee also recommends the compensation to be paid to the CEO (with approval from the full Board of Directors) and reviews and approves the compensation paid to other executive officers. The Committee is composed entirely of “independent directors” as defined by the New York Stock Exchange corporate governance rules.

          The Committee has engaged, and regularly meets with, an independent compensation consultant regarding executive compensation levels and practices. In 2008, the Committee completed a request-for-proposal process, reviewing many compensation consulting firms, and elected to continue to engage Watson Wyatt Worldwide, Inc. as its independent compensation consultant. Watson Wyatt has served as the Committee’s independent consultant since 2001. This consultant is deemed independent in that it is selected by and reports directly to the Committee, and does not maintain any other business relationships or provide any other services to Deluxe that could pose a conflict of interest. The Committee also meets regularly with Watson Wyatt in executive session without management present and conducts an annual review of the consultant relationship.

          Management supports the work of the Committee and its independent consultant by providing company information and data, as requested. Company executives also make recommendations with respect to incentive plan targets in the context of management’s business and operational plans. At the request of the Committee the CEO attended each Committee meeting, met with the Committee and independent consultant as necessary to discuss business strategy, and also meets with the Committee annually to discuss each executive’s individual performance and make recommendations on incentive awards and adjustments to base salary for those executives. The Board’s non-employee directors evaluate the CEO each year and the Committee provides advice to the Board regarding the CEO’s

compensation based on that evaluation and current market data provided by the independent consultants.

Competitive Market Review

          For 2008, the Committee commissioned Watson Wyatt to provide a competitive market review of Deluxe’s executive compensation program in comparison to relevant benchmarks. The data presented by Watson Wyatt was used for analyzing the following: the nature, merits and recommended value of each pay component; the mix of base pay, annual incentive compensation, and long-term incentive values for the Named Executive Officers; and other benefit-related decisions. Based on the recommendation of its compensation consultant, the Committee reviewed two benchmarks for assessing executive pay at Deluxe: published survey data representing companies similar in size to Deluxe, and companies comprising the S&P Mid-Cap 400. The Committee endorsed the use of the S&P Mid-Cap 400 for executive pay analysis based on the fact that Deluxe is a member of the S&P Mid-Cap 400 index, together with its conclusion that this index is representative of companies similar to Deluxe in terms of market capitalization, revenue, and total assets. In addition to using the S&P Mid-Cap 400, market data is drawn from multiple published surveys of broader general industry practices, with a particular focus on industrial companies with revenues comparable to Deluxe. Three survey sources were combined to create the published survey benchmark. The three surveys were: 2008/2009 Watson Wyatt Top Management Survey; 2008 Mercer Executive Compensation Survey; and 2008 Towers Perrin Executive Compensation Survey. The S&P Mid-Cap 400 benchmark data is based on proxy statement disclosures for the index companies’ Named Executive Officers, and the published surveys provide data for the Named Executive Officers and broader executive leadership team.

Executive Officer Compensation Program

          In constructing an overall compensation program, the Committee balances those components that are fixed (such as salary and benefits) against components that are “at risk” and require the achievement of certain levels of performance. The Committee also strives for a balance between compensation tools that reward the executives for the achievement of short-term goals, while also focusing on the long-term growth of the Company. Compared to Deluxe’s general employee population, the Committee believes that executives, including the Named Executive Officers, should have a greater percentage of their total compensation dependant upon reaching performance targets, a higher percentage of which is oriented toward long-term objectives rather than short-term performance. Each year the Committee reviews the form and amount of long-term incentive grants to ensure alignment with the Company’s overall compensation philosophy and to reward attainment of Company goals.

Elements of Compensation

          For 2008, the principal components of our executive compensation program consisted of the following:

	•		base salary;
	•		annual incentive plan;
	•		long-term equity incentives in the form of stock options and performance accelerated restricted stock;
	•		non-qualified deferred compensation plan;
	•		broad-based retirement plans; and
	•		cash allowance perquisite program.

Compensation Mix

          The primary components of executive compensation (base salary, and performance-based pay in the form of annual incentives and long-term incentives) for our Named Executive Officers for 2008 were allocated, at targeted levels of performance, with a higher percentage of performance-based pay compared to base salary. The average target percentage of performance-based pay for the Named Executive Officers is 66% of total compensation, with a higher percentage for the CEO and a lower percentage for the Vice Presidents. Of the total performance-based compensation for the Named Executive Officers, approximately 65% is targeted to be long-term compensation as opposed to annual compensation. Pay practices for the Named Executive Officers emphasize pay for performance and a longer term focus than pay practices for the general employee population.

          The Company uses pay-for-performance principles throughout its pay practices. Adjustments in base pay are linked to performance through the annual performance evaluation process with salary increase guidelines structured to provide higher base pay increases for those who achieve higher than satisfactory performance ratings and lower increases, if any, for those who perform at a satisfactory level or below. The annual incentive plan is similarly structured with an opportunity to earn a higher payout for performance above target and lower payouts, if any, for performance at less than target. The 2008 long-term incentive program also used pay-for-performance principles aligned to share price appreciation, particularly with respect to stock options. In addition, our Named Executive Officers are subject to stock ownership and sale guidelines, which restrict their ability to realize value from their equity awards unless they have achieved their ownership targets.

          Risk management is an important factor in designing incentive programs. While the design of the compensation program is significantly performance-based, we do not believe it encourages excessive risk-taking. We believe the combination of compensation elements in the program provides the Named Executive Officers with the appropriate incentives to create long-term value for shareholders while taking thoughtful and prudent risks to grow the value of the Company. In 2008, the annual incentive plan used operating income and revenue targets, with a minimum operating income threshold that must be achieved before any payout under the plan can be awarded. Each year the Board of Directors reviews the operating plan that forms the basis for the financial performance factors incorporated into the variable compensation plans. This review by the entire Board helps reinforce an appropriate level of risk-taking in the design of the program.

Base Salaries

          The Committee annually reviews the base salaries of Deluxe’s Named Executive Officers. The CEO makes recommendations for changes to base salaries based on each executive’s individual performance and the market data presented by the Committee’s independent compensation consultants. The Committee performs the same analysis with respect to the CEO’s salary. During 2008, base salaries of our executive officers generally were set at or near the median of salaries paid to executive officers of the S&P Mid-Cap 400 companies in similar positions. Deviations from the median can be the result of experience in the position, individual performance exceeding or falling short of expectations, or the individual’s scope of responsibilities. For 2008, the average base salary increase for the Named Executive Officers was 5%, including a promotional increase provided to Mr. Morefield upon his being named a Senior Vice President. The actual change for each Named Executive Officer is illustrated in the Summary Compensation Table.

Annual Incentive Plan

          Named Executive Officers and other officers and management employees selected by the Committee participate in the Deluxe Corporation Annual Incentive Plan (the “Annual Incentive Plan”), which was approved by our shareholders in 2008. The 2008 target amounts approved by the Committee under the Annual Incentive Plan were intended to provide annual cash compensation (i.e., base salary plus bonus) approximating the median of the cash compensation offered to executive officers in similar positions. Bonuses earned may exceed the target amount if performance goals are exceeded, and are less than the target amount if the performance goals are not fully attained, with no bonus payouts if Deluxe’s performance is below certain minimum thresholds. Although the Committee retains the discretion to adjust payouts under the Annual Incentive Plan, in accordance with Section 162(m) of the

Internal Revenue Code (“Section 162(m)”), the Committee may not increase the payouts to the CEO and other Named Executive Officers under the Annual Incentive Plan. To promote stock ownership by the Named Executive Officers and other participants and further align their interests with those of our shareholders, participants may choose to receive up to 100 percent of their Annual Incentive Plan payout in restricted stock units, in which case the Company will provide a 50 percent match on the amounts so elected to be received in restricted stock units. The restricted stock units vest on the second anniversary of the date of the grant. We believe the 50% match and two-year vesting period encourages executive stock ownership and employee retention.

2008 Performance Measures and Objectives

          For the Named Executive Officers, the two performance factors that were considered in determining incentive compensation for 2008 under the Annual Incentive Plan were consolidated revenue and adjusted operating income. “Adjusted operating income” is based on operating income as publicly reported by the Company in its consolidated financial statements, but includes pre-defined adjustments (as permitted by Section 162(m)) to eliminate the effects of items outside the control of management that may create a windfall or shortfall in attainment of operating income targets, such as the adoption of new accounting principles, asset impairments, mergers and acquisitions, restructuring charges, etc. As indicated above, the Committee also retains discretion to make other adjustments to these calculations, provided such adjustments do not result in any increase to amounts payable to the Named Executive Officers. We believe revenue and operating income are critical drivers of our strategy to achieve profitable and sustainable growth, and thereby create long-term value for our shareholders. Each component was weighted equally, with target performance set in line with the Company’s annual operating plan (“AOP”) targets. These AOP targets also served as the basis for the financial performance expectations communicated publicly at the beginning of the year.

          In establishing the metrics and payout scales under the Annual Incentive Plan, although revenue and operating income are weighted equally, the minimum threshold of adjusted operating income must be achieved before any incentive can be paid out. We believe this minimum threshold is an effective check on imprudent risk-taking, in that it ensures that the revenue growth achieved by the Company is profitable. Operating income and revenue targets for the Annual Incentive Plan in 2008 had been set at aggressive but realistic levels, and required year-over-year operating income growth to achieve the targeted payout levels. The 2008 operating income performance target of $301 million was an approximately 14 percent improvement in operating income over the 2007 actual adjusted operating income of $264 million. The payout scale for the adjusted operating income and revenue components of the plan were revised in 2008, which resulted in higher minimum thresholds for both components. The threshold for adjusted operating income increased from the 2007 level of 80 percent of target to 90 percent in 2008, and similarly, the minimum threshold for revenue increased from 95 percent to 98 percent of target in 2008.

Percent of

Adjusted Operating Income

Revenue

Target Award

Performance Level

(50%)

(50%)

(%)

Maximum

110% of plan

103% of plan

200

Target

Operating Income plan

Revenue plan

100

Threshold

90% of plan

98% of plan

50

Below Threshold

0

Actual award payments

As indicated in the table below, Deluxe’s actual performance in 2008 did not meet the minimum thresholds for either adjusted operating income or revenue.

		Target				Actual				Weighting				Payout Percent
Measures (Millions)		($)				($)				(%)				(% of target)
Adjusted Operating Income			301.4				247.6				50				0
Revenue			1,583.3				1,468.7				50				0
Blended Payout Percentage															0

As a result, no annual incentive award payments were made to the Named Executive Officers for 2008.

Long-Term Incentive Compensation

          After analyzing a variety of approaches for delivering long-term incentive value to the Named Executive Officers and other key employees who participate in the Company’s long-term incentive program, beginning in 2006 the Committee endorsed a strategy that employs a combination of stock options and performance accelerated restricted stock. Given that operating cash flow is viewed by the Company as another key financial performance metric, the partial vesting accelerator used in these restricted stock grants is a threshold measure of operating cash flow. Named Executive Officers, together with other designated key employees, received grants of stock options and performance accelerated restricted stock in 2008. The Company believes this strategy achieves several critical objectives, including:

	•		Supporting and rewarding the achievement of Deluxe’s long-term business strategy and objectives;
	•		Encouraging decisions and behavior that will increase shareholder value;
	•		Reinforcing the pay-for-performance orientation of the overall executive compensation program;
	•		Allowing Deluxe to attract and retain key executive talent by providing competitive incentive and total compensation opportunities; and
	•		Promoting share ownership and facilitating achievement of the ownership guidelines.

          The target value of the long-term incentive compensation for 2008 approximated the median of the long-term incentive compensation provided to executive officers in the S&P Mid-Cap 400 group of companies where such comparisons were possible and otherwise relied on the median reported in published surveys. All long-term incentive awards to Named Executive Officers and other key employees are granted on the same date, with the exception of awards made in conjunction with an individual’s promotion or hire into the Company or as necessary to facilitate broader retention of key employees. For 2008, the grant date for the equity awards coincided with the regularly scheduled February Compensation Committee meeting. The timing of the annual grants also aligns with the employee performance evaluation process and is outside any regular stock trading blackout period. The exercise price of all 2008 option grants is the closing price of Deluxe stock on the grant date.

          For 2008, the long-term incentive value was divided equally between stock options and performance accelerated restricted stock. The 50 percent delivered in stock options vests in three equal annual installments beginning on the first anniversary of the grant date and focuses the executives on share price appreciation. The remainder of the long-term incentive value is delivered in performance accelerated restricted stock. The performance accelerated restricted stock vests three years from the grant date, but vesting on 50 percent of the stock can be accelerated to the first anniversary of the grant date, based on achievement of a threshold level of operating cash flow. The performance accelerated restricted stock focuses the executive on making decisions that deliver cash flows, otherwise supports long-term shareholder value through stock price appreciation, and encourages stock ownership. The Company did not achieve the minimum cash flow target in 2008, and as a result, no accelerated vesting occurred.

          Both the stock options and performance accelerated restricted stock awards granted in 2008 contain “clawback” provisions requiring forfeiture if the recipient’s employment is terminated for cause or if the recipient engages in certain activity against the Company’s interests after termination. Stock options awarded under the long-term incentive program in 2009 contain similar forfeiture provisions.

          For the 2009 plan year, the long-term incentive program will consist of stock options and a cash performance plan. Approximately 40 percent of the targeted long-term incentive value will be delivered in

stock options that vest in three equal installments beginning on the first anniversary of the grant date (i.e., similar to options granted in the past). The remainder of the long-term incentive value for 2009 will be delivered in a cash performance plan, as opposed to restricted stock. A primary reason for moving to a cash performance plan was to help manage share usage and dilution, given that a greater number of shares would be required to deliver the same value as a result of currently depressed stock prices. Although the check business continues to be a major component of our business in which we continue to invest, it is a declining market. To off-set the check business decline, the Company also must focus on increasing non-check revenue. The 2009 cash performance plan will employ a two-year performance period, and will measure the non-check revenue as a percentage of total revenue combined with a threshold measure of profitability before any amount over the minimum award can be earned. Awards under this plan will be paid-out on the third anniversary of the commencement of the performance period, with an opportunity to pay 50 percent of the award at the second anniversary if the non-check revenue percentage is at or above target performance. In order to ensure that this program provides a retention incentive, a minimum payout equal to 75 percent of the targeted value of each participant’s award will be made to each award recipient who remains employed with the Company for the three-year period. As indicated in the Executive Summary, retention of key talent is viewed by the Committee as an important issue in light of the significant deterioration in value of outstanding long-term incentive awards, and the Committee determined that this minimum payout threshold is necessary and appropriate, particularly in light of the fact that this program is replacing the time-vested restricted stock grants used in prior years.

Deferred Compensation Plan

          Deluxe maintains a deferred compensation plan under which Named Executive Officers and other key employees may choose to defer up to 100 percent of base salary (less applicable deductions) and up to 50 percent of any bonus payout into multiple investment options. The investment options match, or are similar to, the investment options available to employees in the Company’s broad-based retirement plans. In 2008, the deferred compensation plan was restated, and all other plans and agreements containing deferred compensation elements were amended or otherwise modified, to comply with the requirements of Internal Revenue Code Sections 409A.

Retirement Program

          The Named Executive Officers are eligible to participate in the same qualified retirement plans available to most employees. The program consists of three components, including a defined contribution pension plan, an annual profit sharing plan (under which contributions, if any, are based on Deluxe’s performance), and a 401(k) plan. The retirement program is regularly benchmarked against companies that are in businesses similar to Deluxe and/or are located in geographic areas from which we recruit talent to ensure that it is competitive in the market. The incremental value of benefits provided to the Named Executive Officers under this program is included in the All Other Compensation column of the Summary Compensation Table.

          Deluxe also has a non-qualified defined contribution plan which restores benefits lost under the foregoing qualified plans due to Internal Revenue Code limits, also known as an ERISA excess plan. Contributions for the Named Executive Officers under this plan for 2008 are also reflected in the All Other Compensation column of the Summary Compensation Table.

Cash Allowance Perquisite Program

          In 2008, all Named Executive Officers, with the exception of Mr. Schram, participated in the executive officer Personal Choice Program. The Personal Choice Program provides a fixed cash allowance to participating Named Executive Officers in lieu of any other perquisites. The quarterly cash allowance of $7,500 for Senior Vice Presidents and $5,000 for Vice Presidents on the Executive Leadership Team is intended to cover personal expenses typically incurred by executives as a result of their positions (such as financial and tax planning, vehicle mileage, etc.). As with the other compensation components, this program is compared to market benchmarks of other perquisite programs on an annual basis. The Company chose this program as being more flexible for the executives, less administratively burdensome, and less costly to the organization because there are no tax gross-ups on the amounts provided under this program.

Stock Ownership Guidelines

          Deluxe has established stock ownership guidelines for its executive officers and independent Board members, and the Compensation Committee regularly reviews each executive officer’s and director’s progress toward attaining his or her ownership target. The current target for the CEO is five times annual base salary, for all senior vice presidents is two times annual base salary and for vice presidents who are members of the executive leadership team is one and one-half times annual base salary. The guidelines call for the targeted level of ownership to be achieved within five years of the later of the date the ownership guidelines were implemented, or the time the individual becomes an executive officer. For purposes of calculating an executive’s stock ownership under these guidelines, stock options are not included. While restricted shares and restricted stock units convertible into shares are included, only 60 percent of their value is counted toward the ownership target prior to vesting, based on the rationale that approximately 40 percent of such shares or units will be withheld or surrendered by the executive upon vesting to cover taxes. As a result of the stock market deterioration in 2008, the value of each executive’s stock ownership was severely impacted. In light of these economic developments, and the fact that all executives continued to increase their actual share ownership in 2008, the Committee determined that the executives were continuing toward their ownership targets at an appropriate pace, and will review their progress again in 2009.

          In addition to the stock ownership guidelines, executive officers and directors are subject to share retention and holding period requirements. Under this policy, individuals who have not achieved their ownership targets must retain 75 percent of the net shares (i.e., shares remaining after exercise costs and applicable taxes are covered) upon the exercise of stock options and vesting of other equity awards, and are required to hold the shares until the ownership targets are met. The Company also maintains a general policy against transactions by directors and executive officers intended to hedge the economic risk of ownership in Deluxe stock, and requires any such hedging transactions to be pre-approved by the Board’s Corporate Governance Committee.

Severance, Retention and Change of Control Arrangements

          Deluxe maintains severance arrangements or agreements with each of its Named Executive Officers (collectively “arrangements”). The arrangements are intended to facilitate the executives’ attention to the affairs of Deluxe and to recognize their key role within the Company. If their employment is terminated without “cause” by Deluxe or by the executive with “good reason,” he or she is eligible to receive severance benefits. The Severance Calculation table appearing later in this proxy statement, together with the accompanying narrative to that table, explains in detail the benefits provided under these arrangements and the circumstances under which a Named Executive Officer would be eligible for severance benefits. Receipt of these benefits is conditioned upon the Named Executive Officer entering into a release and agreeing to maintain the confidentiality of Company confidential information for a period of two years after their termination. Mr. Schram’s employment agreement also requires that for two years after he ceases to be employed by Deluxe, he will not engage in any business that competes with Deluxe, will not hire any employee or induce an employee to provide confidential information to a third party, and will not induce any customer or supplier to stop doing business with the Company.

          The Company also maintains retention agreements (“Retention Agreements”) with Mr. Schram and the Named Executive Officers that are designed to ensure that Deluxe will receive the continued service of the Executive in the event of a change of control, by reducing the distraction that could be caused by personal uncertainty about their compensation and benefits under those circumstances. These Retention Agreements are addressed in greater detail in the narrative accompanying the Change of Control Calculations table appearing later in this proxy statement. Generally speaking, however, these Retention Agreements provide incentives for the Named Executive Officer to remain with Deluxe through a change of control, and provide certain benefits in the event the Named Executive Officer’s employment is negatively impacted as a result of, or following, a change of control. In other words, benefits are not paid out automatically upon a change of control, but only if the Named Executive Officer’s employment is negatively affected (i.e., a double trigger). Moreover, the severance arrangements described above do not apply if the Named Executive Officer’s employment is terminated following a change of control under circumstances that would entitle them to receive benefits under the Retention Agreements. Named Executive Officers whose employment with the Company continued at the end of 2008 also entered into

an Addendum to the arrangements and Retention Agreements to ensure compliance with Internal Revenue Code Section 409A.

          The terms of these Retention Agreements and severance arrangements, including the Section 409A addendum, are addressed in the narrative accompanying the Severance and Change of Control Calculations tables appearing later in this proxy statement.

2008 Executive Officer Transitions

          As Deluxe continued to execute its growth strategies in 2008, various organizations within the Company continued to be realigned to support those strategies, and the roles and responsibilities of many key management positions, including those at the Executive Leadership Team level, were redefined. As part of these changes, two former executive officers, Luann Widener and Leanne Branham, transitioned out of the Company in 2008 and became entitled to receive benefits under the severance arrangements discussed above. The accrued value of these benefits is reflected in the “All Other Compensation” column of the Summery Compensation Table appearing later in the proxy statement. These executives’ separation from service also resulted in the vesting of various equity awards previously granted to the executives during their tenure at Deluxe, which likewise are reflected in Summary Compensation Table.

Compliance with Section 162(m) of the Internal Revenue Code

          Section 162(m) of the Internal Revenue Code limits the deductibility of compensation in excess of $1 million paid to certain executive officers, unless such compensation qualifies as “performance-based compensation.” Among other things, in order to be deemed performance-based compensation for Section 162(m) purposes, the compensation must be based on the achievement of pre-established, objective performance criteria and must be pursuant to a plan that has been approved by Deluxe’s shareholders. With the exception of a portion of the compensation paid to Mr. Schram, which includes the vesting of certain one-time awards and benefits included in his 2006 hiring package and equity awards that do not qualify as performance-based compensation, we expect that all compensation paid in 2008 to the executive officers under the plans and programs described above will qualify for deductibility, either because the compensation is below the threshold for non-deductibility provided in Section 162(m) or because the payment of such compensation complies with the performance-based compensation provisions of Section 162(m).

          The Company believes that it is important to continue to be able to take all available tax deductions with respect to the compensation paid to its executive officers, and has taken such actions as may be necessary to continue to qualify significant portions of executive compensation as performance-based under Section 162(m).

Compensation Committee Report

     The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and be incorporated by reference into Deluxe Corporation’s Annual Report on Form 10-K for the year ending December 31, 2008.

MEMBERS OF THE COMPENSATION COMMITTEE

Charles A. Haggerty, Chair
Don J. McGrath
Neil J. Metviner
Stephen P. Nachtsheim

Executive Compensation Tables

          The Summary Compensation Table, Other Compensation Supplemental Table, and Grants of Plan-Based Awards Table presented on the following pages summarize the total compensation paid to or earned by (i) each of the individuals who served as Deluxe’s Chief Executive Officer or Chief Financial Officer during any part of 2008, (ii) the next three most highly compensated individuals serving as executive officers at the end of the year, and (iii) two former executive officers who would have been among the three most highly compensated officers in 2008 but for the fact that they were no longer employed by Deluxe at year-end (collectively, the “Named Executive Officers”). The following narrative is provided to help you understand the information presented in those tables.

          In accordance with the employment agreement executed at the time of his hiring, and to replace forfeited compensation earned at his previous employer, Mr. Schram was granted 59,575 shares of restricted stock on May 1, 2006, the date he commenced his employment with the Company. Fifty percent of the grant vested on May 1, 2007, and the remaining 50 percent vested on May 1, 2008. Therefore, a portion of this hire grant is reflected in Mr. Schram’s 2008 stock award compensation appearing in the Summary Compensation Table.

          The base salaries of Named Executive Officers were generally set at or near the median for executive officers of the S&P Mid-Cap 400 companies in similar positions. The Named Executive Officers participate in the Company’s Annual Incentive Plan, under which bonuses can be earned based on pre-established performance criteria. For 2008, these criteria included adjusted operating income and revenue. As discussed in the Compensation Discussion and Analysis section of this proxy statement, the performance criteria were not met in 2008 and no incentive plan payment was awarded.

          All of the Named Executive Officers participate in a long-term incentive compensation program, pursuant to which they were awarded stock options and performance accelerated restricted stock in 2008. The target value of the program approximates the median of long-term incentive compensation provided to executive officers in the S&P Mid-Cap 400 group of companies. The awards to Named Executive Officers under the program were granted on the same day as awards to all eligible employees. The exercise price for each option grant is the closing price of Deluxe’s stock on the grant date. The options vest annually in one-third increments, and performance accelerated restricted stock awards vest after three years, except that 50 percent of the performance accelerated stock awards could vest within one year if a 2008 cash flow target were achieved. The cash flow target was not met and acceleration did not occur. Dividend or dividend equivalents for these equity-related awards are paid at the same rate and time as regularly scheduled dividends, although no dividend equivalents are paid on options.

          The Named Executive Officers, other than the CEO, also participate in a program that provides a quarterly cash allowance for personal expenses typically incurred by executives, and was discussed previously in the Compensation Discussion and Analysis section of this proxy statement.

SUMMARY COMPENSATION TABLE

																						Non-Equity Incentive
														Stock				Option				Plan				All Other
						Salary				Bonus1				Awards2				Awards3				Compensation4				Compensation5				Total
Name		Year				($)				($)				($)				($)				($)				($)				($)
Lee J. Schram6			2008				780,000				0				526,667				788,418				0				164,942				2,260,027
Chief Executive Officer			2007				745,000				0				2,673,387				582,814				0				121,249				4,122,450
			2006				483,333				541,667				606,631				152,992				0				146,768				1,931,391
Richard S. Greene7			2008				364,167				0				148,200				167,292				0				74,958				754,617
Sr. Vice President & Chief			2007				354,167				0				203,142				105,575				230,739				127,083				1,020,706
Financial Officer			2006				87,500				0				12,500				0				10,938				5,197				116,135
Anthony C. Scarfone			2008				332,500				0				122,205				170,614				0				71,538				696,857
Sr. Vice President, General			2007				320,000				0				404,116				132,793				145,962				85,026				1,087,897
Counsel & Secretary			2006				290,000				0				203,799				53,688				36,250				68,927				652,664
Terry D. Peterson			2008				294,873				0				59,730				64,684				0				49,273				468,560
Vice President & Chief			2007				282,200				0				152,426				47,917				147,083				53,447				683,073
Accounting Officer			2006				240,158				0				95,983				16,471				24,016				42,880				419,508
Thomas L. Morefield8			2008				263,958				0				44,392				57,141				0				36,847				402,338
Sr. Vice President, Financial Services
Luann E. Widener9			2008				294,833				0				308,033				431,098				0				628,646				1,662,610
Retired			2007				345,000				0				561,019				149,588				56,211				80,739				1,192,557
Sr. Vice President &			2006				304,948				0				194,808				61,485				38,119				67,718				667,078
President — Financial Services & Small Business Segments
Leanne E. Branham10 Former Vice President of Fulfillment			2008				97,254				0				20,561				142,682				0				424,812				685,309

OTHER COMPENSATION SUPPLEMENTAL TABLE

										Payments/				Company				Dividends or
		Perks and Other								Accruals on				Contributions to				Earnings on Stock
		Personal				Tax				Termination				Defined				or Option
		Benefits1				Reimbursement				Plans2				Contribution Plans				Awards3				Other4				Total
Name		($)				($)				($)				($)				($)				($)				($)
Lee J. Schram			0				0				0				16,100				126,842				22,000				164,942
Richard S. Greene			30,000				0				0				16,100				14,265				14,593				74,958
Anthony C. Scarfone			30,000				0				0				16,100				15,500				9,938				71,538
Terry D. Peterson			20,000				0				0				16,100				4,695				8,478				49,273
Thomas L. Morefield			10,000				0				0				16,100				4,454				6,293				36,847
Luann E. Widener			25,000				0				534,783				16,100				18,004				34,759				628,646
Leanne E. Branham			10,000				0				393,248				4,746				2,063				14,755				424,812

GRANTS OF PLAN-BASED AWARDS IN 2008

																														All Other Stock				All Other Option Awards:								Grant Date
																														Awards:				Number of				Exercise or				Fair Value
						Estimated Possible Payouts Under												Estimated Possible Payouts Under Equity												Number of				Securities				Base				of Stock
						Non-Equity Incentive Plan Awards1												Incentive Plan Awards1												Shares of				Under-lying				Price of				and Option
						Threshold				Target				Maximum				Threshold				Target				Maximum				Stock or				Options 3				Option				Awards 4
Name		Grant Date				($)				($)				($)				($)				($)				($)				Units (#)2				(#)				Awards ($/Sh)				($)
Lee J. Schram			2/20/08				—				—				—				585,000				1,170,000				2,340,000				26,400				117,400				22.52				579,957
																																											594,528
Richard S. Greene			2/20/08				91,042				182,084				364,169				—				—				—				7,900				35,200				22.52				173,888
																																											177,908
Anthony C. Scarfone			2/20/08				62,344				124,688				249,376				31,172				62,344				124,688				6,100				27,400				22.52				135,356
																																											137,372
Terry D. Peterson			2/20/08				11,795				23,590				47,180				70,770				141,539				283,078				2,600				11,700				22.52				57,798
																																											58,552
Thomas L. Morefield			2/20/08	5			58,463				116,926				233,852				—				—				—				2,100				9,300				22.52				45,942
																																											47,292
																															1,400				5,700				17.35				25,536
																																											24,290
Luann E. Widener			2/20/08	6			—				—				—				—				—				—				7,000				31,300				22.52				154,622
																																											157,640
Leanne E. Branham			2/20/08	7			—				—				—				—				—				—				2,600				11,700				22.52				57,709
																																											58,552

OUTSTANDING EQUITY AWARDS AT 2008 FISCAL YEAR-END

		Option Awards																Stock Awards
		Number of				Number of
		Securities				Securities
		Underlying				Underlying												Number of Shares				Market Value of
		Unexercised				Unexercised												or Units of Stock				Shares or Units of
		Options				Options				Option Exercise				Option				Held That Have				Stock That Have Not
		(#)				(#)				Price				Expiration				Not Vested				Vested1
Name		Exercisable				Unexercisable				($)				Date				(#)				($)
							117,400	2			22.52				02/20/2015
																			56,945	3			851,897
																			26,400	4			394,944
Lee J. Schram			64,400				128,800	5			32.65				02/13/2014
																			13,450	6			201,212
																			2,000	7			29,920
			121,333				60,667	8			23.50				05/01/2013
																			27,200	9			406,912
							35,200	10			22.52				02/20/2015
Richard S.																			7,900	11			118,184
Greene			19,300				38,600	12			32.65				02/13/2014
																			4,000	13			59,840
							27,400	14			22.52				02/20/2013
																			3,668	15			54,873
																			6,100	16			91,256
			15,000				30,000	17			32.65				02/13/2014
Anthony C.																			3,100	18			46,376
Scarfone			17,400				8,700	19			26.58				02/14/2013
																			3,900	20			58,344
			4,800								39.63				04/27/2012
			4,800								42.35				05/4/2011
			30,000								38.54				03/10/2010
			25,925								16.42				10/26/2010
			30,000								47.67				03/14/2009
							11,700	21			22.52				02/20/2015
																			2,600	22			38,896
Terry D.			5,134				10,266	23			32.65				02/13/2014
Peterson																			1,050	24			15,708
			7,200				3,600	25			26.58				02/14/2013
																			1,600	26			23,936
			2,150								39.63				03/27/2012
							5,700	27			17.35				09/03/2015
																			1,400	28			20,944
							9,300	29			22.52				02/20/2015
																			2,100	30			31,416
Thomas L.			4,067				8,133	31			32.65				02/13/2014
Morefield																			850	32			12,716
			3,600				3,600	33			26.58				02/14/2013
			1,530								39.63				04/27/2012				1,600	34			23,936
			800								42,35				05/04/2011
			4,500								38.54				03/10/2010
			3,750								47.67				03/14/2009

OUTSTANDING EQUITY AWARDS AT 2008 FISCAL YEAR-END (cont.)

Option Awards

Stock Awards

Number of

Number of

Securities

Securities

Underlying

Underlying

Number of Shares

Market Value of

Unexercised

Unexercised

Option

or Units of Stock

Shares or Units of

Options

Options

Exercise

Option

Held That Have

Stock That Have Not

(#)

(#)

Price

Expiration

Not Vested

Vested1

Name

Exercisable

Unexercisable

($)

Date

(#)

($)

31,300

22.52

10/31/2011

51,500

32.65

10/31/2011

11,600

26.58

10/31/2011

Luann E.

10,133

24.99

10/31/2011

Widener

4,000

39.63

10/31/2011

2,870

42.35

05/04/2011

10,000

38.54

03/10/2010

10,000

47.67

03/14/2009

Lee J. Schram: 2- Stock options granted on 2/20/08 vest in three equal installments on 2/20/09, 2/20/10 and 2/20/11. 3- Restricted stock units granted on 1/22/08 vest on 1/22/10. 4- Performance Accelerated Restricted Stock (“PARS”) granted on 2/20/08 vest on 2/20/11. 5- Stock options granted on 2/13/07 vest in two equal installments on 2/13/09, and 2/13/10. 6- PARS granted on 2/13/07 vest on 2/13/10. 7- Restricted stock granted on 2/13/07 vest on 2/13/09. 8- Stock options granted on 5/1/06 with the final installment vesting on 5/1/09. 9- PARS granted on 5/1/06 vest on 5/1/09.

Richard S. Greene: 10- Stock options granted on 2/20/08 vest in three equal installments on 2/20/09, 2/20/10 and 2/20/11. 11- PARS granted on 2/20/08 vest on 2/20/11. 12- Stock options granted on 2/13/07 vest in two equal installments on 2/13/09 and 2/13/10. 13- PARS granted on 2/13/07 vest on 2/13/10.

Anthony C. Scarfone: 14- Stock options granted on 2/20/08 vest in three equal installments on 2/20/09, 2/20/10 and 2/20/11. 15- PARS granted on 2/20/08 vest on 2/20/11. 16- Restricted stock units granted on 1/22/08 vest on 1/22/10. 17- Stock options granted on 2/13/07 vest in two equal installments on 2/13/09 and 2/13/10. 18- PARS granted on 2/13/07 vest on 2/13/10. 19- Stock options granted on 2/14/06 with the final installment vesting on 2/14/09. 20- PARS granted on 2/14/06 vest on 2/14/09.

Terry D. Peterson: 21- Stock options granted on 2/20/08 vest in three equal installments on 2/20/09, 2/20/10 and 2/20/11. 22 - PARS granted on 2/20/08 vest on 2/20/11. 23 - Stock options granted on 2/13/07 vest in two equal installments on 2/13/09 and 2/13/10. 24 - PARS granted on 2/13/07 vest on 2/13/10. 25- Stock options granted on 2/14/06 with the final installment vesting on 2/14/09. 26- PARS granted on 2/14/06 vest on 2/14/09.

Thomas L. Morefield: 27- Stock options granted on 9/3/08 vest in three equal installments on 9/3/09, 9/3/10 and 9/3/11. 28- PARS granted on 9/3/08 vest on 9/3/11. 29- Stock options granted on 2/20/08 vest in three equal installments on 2/20/09, 2/20/10 and 2/20/11. 30- PARS granted on 2/20/08 vest on 2/20/11. 31- Stock options granted on 2/13/07 vest in two equal installments on 2/13/09 and 2/13/10. 32- PARS granted on 2/13/07 vest on 2/13/10. 33- Stock options granted on 2/14/06 with the final installment vesting on 2/14/09. 34- PARS granted on 2/14/06 vest on 2/14/09.

2008 OPTION EXERCISES AND STOCK VESTED

		Option Awards								Stock Awards
		Number of								Number of
		Shares				Value				Shares
		Acquired on				Realized on				Acquired on				Value Realized
		Exercise				Exercise				Vesting				on Vesting
Name		(#)				($)				(#)				($)
Lee J. Schram1			0				0				43,238				1,006,851
Richard S. Greene2			0				0				9,787				171,531
Anthony C. Scarfone3			0				0				15,130				338,742
Terry D. Peterson4			0				0				8,430				188,538
Thomas L. Morefield5			0				0				1,165				26,189
Luann E. Widener6			0				0				41,189				660,824
Leanne E. Branham7			0				0				3,266				71,569