2018 Guide to Effective Proxies

2.17.8 Pay for performance alignment | 427 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES GOLDMAN SACHS GROUP, INC. Compensation Matters | Compensation Discussion and Analysis 2017 Firmwide Performance Our Compensation Committee places substantial importance on firmwide performance metrics when assessing NEO compensation amounts. In assessing 2017 performance, the Committee believed it was appropriate to exclude the estimated negative impact of the charge related to U.S. Tax Legislation and the positive impact of the Stock Accounting Standard, given these items were outside management’s control and did not reflect the firm’s operating performance. Key factors the Committee considered included: d The firm’s solid operating performance despite a challenging environment for certain of our businesses, including net revenue growth of 5%, pre-tax earnings growth of 8% and EPS growth of 11% (Ex. U.S. Tax Legislation and Stock Accounting Standard), in each case compared to 2016 and measured on both an absolute basis and relative to our U.S. Peers and European Peers; d Our focus on operating efficiency, which drove positive operating leverage, including net revenue growth that outpaced operating expense growth and a year-over-year decline in compensation ratio of 110 basis points; d The firm’s strong positioning in Investment Banking, including our continued #1 position in announced and completed M&A league tables, our #1 ranking in equity and equity-related offerings and our leading position in leveraged finance, as well as the second-highest ever annual revenues for the business; and d The strength of our Investment Management business, where the firm achieved record annual net revenues and record assets under supervision amid a challenging backdrop for active asset managers. In assessing our financial performance, the Committee reviewed ROE, pre-tax earnings, EPS and BVPS, as well as our stock price performance, net revenues, net earnings, compensation and benefits expense, non-compensation expense and Compensation Ratio. All metrics were considered on a year-over-year basis, as well as, where relevant, relative to our U.S. Peers and European Peers and in the context of the broader environment in which the firm operates, on a reported and Ex. U.S. Tax Legislation and Stock Accounting Standard basis, as applicable. 2017 CEO Annual Compensation: U.S. Peer Comparison d We believe peer comparability is an important factor in assessing our pay for performance alignment. d The chart at right provides additional information on our pay for performance alignment in the context of 2017 annual CEO pay determinations and annual ROE for each of our U.S. Peers. For purposes of comparability, ROE is shown Ex. U.S. Tax Legislation for all firms. 2017 CEO Annual Compensation 1 2017 ROE (Ex. U.S. Tax Legislation) $29.5mm JPM MS GS BAC C $27mm $24mm $23mm $23mm 9.7% 10.8% 7.9% 7.0% 10.9% 1 Annual compensation includes base salary, cash bonus paid and deferred cash/equity-based awards granted, in each case for 2017 performance, as reported in SEC filings (with respect to BAC, C and JPM) and in press articles citing bank spokesman (with respect to MS). Proxy Statement for the 2018 Annual Meeting of Shareholders | Goldman Sachs 41 $29.5mm$27mm$24mm$23mm$23mm10.9%9.7%10.8%7.9%7.0%JPMMSGSBACC2017CEOAnnualCompensation12017ROE(Ex.U.S.TaxLegistion)