Here is your culprit, right here . . . .
Open templates/ja_graphite/css/menu/mega.css
at line 12, you should see the following:
<blockquote>.ja-megamenu ul.level0 li.mega a.mega {
color: #999999;
font-family: ‘Arial Narrow’,Tahoma,Verdana,sans-serif;
font-size: 120%;
font-weight: normal;
margin-bottom: 5px;
padding: 25px 15px;
text-transform: uppercase;
}</blockquote>
You need to reduce the padding property(s), for example . . . .
<blockquote>.ja-megamenu ul.level0 li.mega a.mega {
color: #999999;
font-family: ‘Arial Narrow’,Tahoma,Verdana,sans-serif;
font-size: 120%;
font-weight: normal;
margin-bottom: 5px;
padding: 10px 15px;
text-transform: uppercase;
}
</blockquote>
Of course, you can play around with the pixel value until you arrive at your desired effect.
Hope that helps.