Outlook for 2013 Compensation

A Message from Lynne Doughtie and Carl Carande

As we head into summer and the start of the fourth quarter of FY13, we want to provide you with an update on our firms performance, as well as information about our plan for employee compensation. We are pleased to report that the firm is on track for a good year, with operating results expected to be ahead of plan. This is great news, and a direct result of your hard work and contributions. And, while we still have three months ahead of us, we are confident that, working together, we can finish FY13 in a strong position. So what does this mean for FY13 compensation? As we have said in the past, our philosophy is that as the business does well, we will share those rewards with our people. And this is exactly what we plan to do in Advisory this year, particularly as it comes to our variable compensation awards. Variable Compensation Assuming we remain ahead of plan, we fully expect that the average variable compensation award will be toward the higher end of the guidelines that we originally communicated in November of 2012.As a reminder, individual performance ratings will remain the primary factor in determining your FY13 variable compensation. This is reflected in the following tables which include VC award ranges by level: FY13 VC Award Ranges as communicated in November 2012 1-Rated Director Manager Sr. Associate Associate 11 - 15% 11 - 15% 9 - 13% 7 - 11% 2-Rated 8 - 11% 8 - 11% 7 - 10% 6 - 9% 3-Rated Up to 7% Up to 7% Up to 6% Up to 5%

INTERNAL USE ONLY

Lynne Doughtie Vice Chair, Advisory

Carl Carande National Managing Partner, Advisory

Note: Employees must have been hired on or before April 30, 2013, to be eligible

for variable compensation.

Merit Increases We expect that our merit increase ranges will be attractive, competitive, and comparable to the merit ranges from last year. Obviously, individual merit increases will depend on each persons specific circumstances, such as performance and job level. Merit increases and VC awards will be communicated to you in mid-October and reflected in the October 31, 2013 pay cycle. Merit increases will be retroactive to October 1, 2013. This schedule will allow us to take full advantage of available information to drive the highest possible correlation between the contributions of our people and their FY13 compensation. We know that rewarding and recognizing people is critical to maintaining our high-performance culture, and were committed to providing an attractive and competitive total compensation package that differentiates exceptional performers with superior rewards. So remember, for us all to look forward to the attractive variable compensation awards noted above, it is critical that we remain focused on exceeding our performance goals, providing exceptional, high-quality service to clients and colleagues, and continuing to stay ahead of plan in the last quarter of the year. Thanks for everything you do to help KPMG succeed!

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