Goldman Sachs Compensation Practices The Goldman Sachs Group, Inc. December 2009

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Cautionary Note on Forward Looking Statements

This presentation may include forward-looking statements. These statements represent the firm’s belief regarding future events that, by their nature, are uncertain and outside of the firm’s control. The firm’s actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements.

For a discussion of some of the risks and factors that could affect the firm’s future results, please see the description of “Risk Factors” in our annual report on Form 10-K for our fiscal year ended November 2008. You should also read the information on the calculation of non-GAAP financial measures that is posted on the Investor Relations portion of our website: www.gs.com.

The statements in this presentation are current only as of its date.

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Goals of Compensation Overview of Goldman Sachs’ Compensation Principles Attract and Retain Talent Our compensation framework is designed to attract and retain the most talented human capital, which has been a key

contributor to generating excess returns relative to peers Align Compensation with Results, Particularly for Senior Management To avoid misaligning compensation and performance, we do not award multi-year, guaranteed employment contracts Senior and more highly paid employees experience more variability in their compensation based on year-to-year changes in

our firm's results Evaluate Performance Over Time Compensation, in most cases, includes discretionary compensation, as appropriate, awarded at year-end The percentage of compensation awarded in equity increases as an employee’s total compensation increases Equity awards are subject to vesting, transfer and other restrictions over a extended period of time, including recapture

provisions Discourage Excessive or Concentrated Risk Taking The risk/return profile of one’s business is taken into account in individual compensation determination Revenue producers do not determine the compensation of risk managers No employees compensated based on a fixed percentage of earnings Align Employee and Shareholder Interests Our compensation policies encourage employees to think and act like long-term shareholders. Being significantly invested in

our stock over time, as part of an individual’s compensation, advances our partnership culture of stewardship for our firm

Goldman Sachs’ compensation framework aligns the interests of our employees with the long-term interests of our shareholders.

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Compensation Process

Compensation is comprised of annual salary and, as appropriate, discretionary compensation awarded at the end of the year1

For all employees over a minimum income threshold, discretionary compensation is comprised of both cash and equity-based components — Cash compensation in a single year should not be so much as to overwhelm the value ascribed to

longer term stock incentives that can only be realized through longer term responsible behavior — The percentage of compensation awarded in cash decreases as an employee’s total compensation

increases in order for long-term performance to remain the overriding aspiration to realizing full compensation

We have an annual “360” degree performance evaluation process, which includes peer, junior and senior reviews — Includes, in most cases, views from outside an individual’s business unit and division — Overall performance “quartiling” takes place to benchmark individual performance relative to peers — Evaluation takes multiple criteria into consideration including productivity, teamwork, citizenship,

communication and compliance

The recognition of individual performance must be constrained by the performance of our firm, and not be out of line with the competitive market for the relevant talent and performance

1 A small number of our employees are paid based on commissions

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Compensation Governance Overview of Goldman Sachs’ Compensation Governance Structure

Independent Board Oversight Our Compensation Committee, which is currently comprised of all of independent directors, approves the compensation

structure, including amounts paid in cash versus equity and all equity terms (e.g. vesting, delivery, transfer restrictions and recapture criteria)

Our Corporate Governance and Nominating Committee, which currently consists of all of our independent directors, evaluates our CEO's performance before our Compensation Committee determines his compensation for that fiscal year — The evaluation takes into account the results from our "360 degree" feedback process, which reflects input regarding an

array of performance measures from a number of employees

Our Compensation Committee approves compensation for our CEO and other executive officers and certain other senior employees on a name-by-name basis

For our Participating Managing Directors (PMDs), who are the approximately 400 most senior employees of the firm, the Compensation Committee approves the total compensation pool including how that pool is allocated

Our Compensation Committee also reviews divisional summaries for remaining employees (e.g. total spend by division, year-over-year percent changes)

On-Going Review of Compensation Programs Management and our Compensation Committee review our compensation programs to assess whether they meet our

objectives and are appropriate for the current environment Our Compensation Committee also retains an independent consultant, who provides services solely to our Compensation

Committee and not to our firm, to assist it in its review of our compensation programs

Publicly Disclosed Compensation Principles The Goldman Sachs Compensation Principles reflect the general principles that guide our Compensation Committee’s review

of employee compensation. They are available on our firm's website

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Attract and Retain Talent Human Capital Driven Business

We operate in a human capital driven industry where we compete for the best talent available globally — Compensation for institutional financial services companies is the equivalent of other industries’

COGS and SG&A

The institutional financial services business model when appropriately managed has produced significantly more attractive results for shareholders than other industries — Goldman Sachs generated an average pre-tax margin of 29% between 2000 and 2008, besting

all the sectors in the Fortune 500 GS Relative to Fortune 500: Average Pre-Tax Margins for 2000 – 20081

1 Publically traded Fortune 500 companies; based on public filings

19%

8% 8% 8%5%

1%

8%

-1%

12%

29%

13%

6%

GS

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GS Pre-Tax Margin Ranks 30th in the Fortune 500

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Attract and Retain Talent Importance of Retaining Senior Management

Retention of senior, experienced employees is critical to successfully executing our business strategy Since institutional financial services is a people driven business, we believe that maintaining our

partnership culture has been critical to our success as a public company — In particular, the partnership culture fosters a collaborative and long term focused managerial

environment amongst the senior leaders of our firm

NEOs Our Named Executive Officers (“NEOs”) have extensive firm tenure, with experience across multiple

operating divisions and geographic regions

Management Committee Our Management Committee is comprised of 30 seasoned senior executives, who represent each major

business and region

GS Senior Management Group Avg. Yrs at GS Avg. # Divisions NEOs 23 4

Management Committee 19 2

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Historic Performance Pay for Performance

Compensation Growth Relative to Revenue Growth1 Indexed Trends: 1999-2007

Compensation growth and revenue growth show a nearly perfect correlation The slight discrepancy is principally driven by years in which revenues grew more significantly than

compensation, with the corresponding benefit accruing to shareholders This is further demonstrated by the fact that between 2000 and 2007, compensation’s CAGR was lower than

Revenues, EPS and BVPS

1 Based on 1999-2008 total compensation and total net revenue growth on an annual basis

R2 = 0.99

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

-60% -40% -20% 0% 20% 40% 60%

Com

p G

row

th

Revenue Growth

50

150

250

350

450

1999

2000

2001

2002

2003

2004

2005

2006

2007

GS Comp Revenues EPS BVPS

CAGR

21%20%

17%

15%

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Historic Performance Compensation Flexibility: Net Revenues and Compensation Ratio since IPO Compensation is designed to pay for performance. For example, revenues and compensation were both down

close to 50% in 2008 In our most profitable years in 2006 and 2007, our compensation rate was the lowest in our history as a public firm

Note 2008 compensation ratio excludes severance related costs

$13.3

$16.6 $15.8$14.0

$16.0

$37.7

$46.0

$22.2$21.0

$25.2

47%

48%

44%

48%

49%

48%

46% 46%

47%

44%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

42%

43%

44%

45%

46%

47%

48%

49%

50%

Net Revenues ($bn) Compensation Ratio

Average Comp. RatioIPO - 2008: 47%

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2008 in Review No discretionary compensation awarded to our top seven senior executives (includes NEOs) in 2008 An even greater percentage of compensation awarded in equity as total compensation level increases RSUs granted in 2008 were subject to extended transfer restrictions

2008 Quarterly Compensation Accrual ($mm)

$4,001 $4,001

$8,523

$10,934 $10,934

$4,522

$2,901

-$490

Q1'08 Q2'08 Q3'08 Q4'08 2008FY

Reversal of Q1'08 - Q3'08

Accrual

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Create Accountability of Senior Management Significant Portion of Compensation Equity Based and Non-transferable for an Extended Period A significant percentage of PMD discretionary compensation at Goldman Sachs is paid in the form of equity to ensure

interests are aligned with shareholders This equity is non-transferable for an extended period; stock price fluctuations drive the ultimate value of the equity award

NEO Discretionary Comp.: ‘03- ‘081 NEO 2007 Equity Comp. - Indicative Quarterly

Valuation Trends

1 Based on Proxy Filings; Discretionary compensation excludes “Other Compensation”

40% 39% 38%51%

39%

60% 61% 62%49%

61%

2003 2004 2005 2006 2007 2008

Cash Equity

No Discretionary

Comp Awarded

'03-'07 MixEquity: 58% / Cash: 42%

$131$140

$131

$47

$183

At Issuance Q1'08 Q2'08 Q3'08 Q4'08

Valu

e of

'07

Equi

ty C

ompe

nsat

ion

($m

m)

74% Decline

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Over / Under Performance GS ROE Relative to Global Peers1

22.6% 24.3% 11.2% 11.4% 15.7% 14.0% 15.9% 19.4% 6.5% -23.3%

1 Represents GS' average annual ROE relative to peer group from 1999-2008 (Peer group includes JPM, MS, BAC, C, MER, BARC, and DB)

-0.1%

8.1%

2.6%1.8%

28.2%

5.9%

26.3%

13.4%

5.8%

-0.7%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

'99-'08 Average ROE TrendsGS Average ROE: 20.9%

Peer Average ROE: 11.5%GS Premium to Peer Average: 9.4%

Peer Avg. ROE:

Δ to Peer Avg.

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Creating Shareholder Value GS and Peer Shareholder Returns Since IPO GS has substantially outperformed peers from a shareholder value creation perspective

— GS’ share price has increased 155% since our IPO, compared to a peer average decline of 44% over the same period — GS also compares favorably to peers from a capital return perspective, averaging 19% of book value returned since our

IPO versus 13% returned for peers

Indexed Share Price Performance1 Buybacks and Dividends2

1 Market data as of 11/09/09 2 Calculated as average annual percentage of beginning of period book value per year from 1999 through 1H’09; Peer average comprised of MS, JPM, C and BAC

0%

50%

100%

150%

200%

250%

300%

350%

400%

May-99 Feb-01 Nov-02 Aug-04 May-06 Feb-08 Nov-09

Inde

xed

Pric

e

GS MS JPM BAC C S&P Financials

155.4%

(17.0)%(17.5)%(43.9)%(55.5)%(87.6)%

17%

7%

2%

6%

GS Peer Avg.

% o

f Boo

k Va

lue

Share Repurchases Dividends

19%

13%

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Creating Shareholder Value

By tying compensation to performance, GS incentivizes employees to create long-term value for our shareholders

GS has generated the highest average EPS growth rate, ROE and BVPS growth and still been able to pay out more on average per employee

By maintaining a sizeable portion of compensation in equity awards that are restricted over an extended period of time, GS encourages employees to take a long-term, firmwide approach to performance

2000 - 2008 Compensation and Performance Metrics

Net Rev to Comp

R2 Avg Comp

Ratio Avg Annual EPS Growth

Avg Annual ROE

BVPS CAGR

Avg Annual Earnings Per

Employee GS 0.99 46.7% 13.5% 19.8% 15% $196,004

Peer Avg 0.67 52.1% 5.9% 10.3% 7% $79,962

GS/Peer Avg %/bps Δ 47% -543 bps 767 bps 951 bps 809 bps 145%

Note: Peer average comprised of JPM, MER, MS, BSC, LEH; BVPS growth for MER, BSC and LEH per latest filed results in 2008; Figures for JPM’s investment banking division only and Avg Annual

Earnings to Employee for JPM average of 2002-2008