2016 ANNUAL REPORT | BUILDING VALUE THROUGH OUR STRATEGY

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we exist to build valuable careers with our people and to help our clients achieve their goals.

Our mission is at the heart of everything we do: we build valuable careers with

our people and we help our clients achieve their goals. I could not be more

proud of our progress as we executed on our mission over the past twelve

months. Each of you has played a significant role in our accomplishments as

you collaborated together, served our clients and supported our communities.

As I reflect on the past year, it is easy to find many reasons to celebrate

success related to people, clients and performance. Our annual report

outlines significant accomplishments in pursuing the DHG strategy, as well as contributions we

have made toward being a great corporate citizen - acting socially responsible and caring for our

communities.

Here are a few accomplishments that I would like to specifically highlight:

• Life Beyond Numbers has successfully become an integral part of our culture as we

focus on careers, people and flexibility.

• We have recently added a Life at DHG blog and podcast series to not only share our DHG

culture externally, but to also connect us to each other through stories about our people

and their Life Beyond Numbers.

• Our RAVE recognition and reward program has also become an important part of our

culture. 20,000+ recognitions have been shared on our RAVE newsfeed since the launch

in September 2015. Of note, the implementation of RAVE is the direct result of feedback

received through our 2014 DHG Voice engagement survey.

• The Inclusion & Diversity Council has developed a clear strategy and has begun

implementation. We are proud to be the recipient of the National Association of Black

Accountants (NABA) 2016 Corporate Diversity Award and we look forward to many great

things in Fiscal 17.

• Women Forward continues to build momentum with market activities and business

development learning opportunities. One great accomplishment for 2016 was the

celebration of Women’s History Month with 60,000+ social media impressions. Read

more about this in the people section of the report.

• Financially, our revenues increased 12%, which represents organic growth of at least

10% in each of our regions. This growth was fueled by strong performance by our

industry teams in all of our service lines. This level of growth takes a tremendous amount

of teamwork and a sharp focus to achieve.

message from matt

• Vault has ranked DHG among the top ten accounting firms in the nation. This ranking

is based on feedback from our employees and is measured by overall quality of life

combined with prestige.

• Based on your feedback in our DHG Voice Engagement Survey, we rank in the 82nd

percentile for employee/partner engagement. This is 13 points above the professional

services norm.

• DHG continues to build our pipeline of leadership succession through early career

learning opportunities, Praxity Emerging Leaders Academy, DHG Leadership Academy

and the rotation of leaders throughout the firm. We are prepared for the future and poised

for continued success.

• One way we pursue our service strategy is through Knowledge Share, with 283 pieces

shared and 74 live events. We look forward to an enhanced strategy in FY17 for even

greater engagement.

• We have significantly enhanced our philanthropic efforts through the use of our new web-

based platform, DHG Gives. Having the capability to give online and track service hours

helps us set goals and measure our progress.

Our future is bright. We have accomplished great things in the past year and have significant plans

to continue moving us forward. I encourage you to take advantage of the opportunities that evolve

from our continued success. When DHG succeeds, so do you. I am truly grateful to have each of

you on our team and I look forward to another successful year.

Sincerely,

Matt

Visit my blog for regular updates: dhgllp.com/ceo-blog

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talent

RECRUIT

In July 2015, we launched the DHG Careers website which highlights our Life Beyond

Numbers - careers, people and flexibility. This authentic glimpse into life at DHG has truly

enhanced the first impression we share with recruits and the connection we feel with

each other. In January 2016, we added a Life at DHG blog and podcast series, which highlights our people

from around the firm. Visitors are currently spending an average of 2.14 minutes on the site and in today’s

world…that is a long time! (Average time on a typical web page is about 1:30 minutes)

CAMPUS RECRUITING

CHECK IT OUT careers.dhgllp.com

EXPERIENCED HIRE RECRUITING

We hire great talent to work with our great talent.

129 full-time hires per year

251 interns per year

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attendees at the 2016 Leadership Conference 28% of attendees were ethnically diverse; 59% were female

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targeted schools

FINANCIAL WELLNESS

As a direct response to feedback received via our engagement survey and Glassdoor, DHG

announced changes to our retirement plan, enabling new employees immediate participation

eligibility, monthly profit sharing contributions and a shortened vesting schedule. Financial

961 interviews

46% of hires come from employee referrals

6% from agencies

292 full-time hires

11% come from LinkedIn

$491K employee referral bonus dollars paid

15,875 applicants

86%offer acceptance rate

9% from direct sourcing

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DEVELOP

RETAIN

DHG UNIVERSITY

At DHG University, developing the whole professional is paramount. It is more than just required CPEs.

Leadership, communications, business development and other related courses build on this vision and

address skills such as critical thinking, engagement management efficiencies, generational differences and

emotional intelligence. In the coming year, the Professional Development team will also be keenly focused on

providing opportunities to grow skills outside of the classroom: growing skills in the office; with clients; on

pursuit teams; and in the community.

FY16 PROFESSIONAL DEVELOPMENT HIGHLIGHTS FY15 FY16 % ChangeCPE Hours 62,558 63,483 1.48%

Attendees 11,576 11,590 0.12%

Courses Offered 154 194 25.97%

Sessions Offered 313 420 34.19%

NON-TECHNICAL TRAINING SESSIONSLeadership 11 15

Engagement Management / Client Service 55 99

Practice Development 8 34

Personal Effectiveness / Team Contribution 58 118

Professional Excellence 133 120

Quality & Compliance 48 27

Total Sessions: 313 413 31.95%

Developing the whole

professional

31.95% more classes

in FY16

RAVE: RECOGNITION AWARD FOR VALUED EMPLOYEES

We learned via our engagement survey that our people desired

recognition so we developed a program called RAVE. Within the first

month of this program, 85% of our people activated their account.

Since its launch in September 2015, RAVE has become an important part of our culture.

RAVE has even become part of our DHG nomenclature as a verb – if someone does

something great, do not forget to RAVE about them!

To date

20,000+ recognitions have been shared on our RAVE newsfeed.

2016 Engagement Survey Results

PSN: Professional Services Norm

92% FY15 | 82% PSN

voice FY16

BELIEVE IN DHG’S VALUES94%

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leadership

inclusion & diversity councilDHG continues to push the needle forward with our Inclusion and Diversity (I&D) focus. In the coming year, we

will implement programs around sponsorship, integration of diversity into all areas of communications both

internally and externally, an I&D focused website, a learning curriculum and a dashboard to track progress

and accomplishments.

NATIONAL ASSOCIATION OF BLACK ACCOUNTANTS

DHG was recently recognized by the National

Association of Black Accountants (NABA) with

the 2016 Corporate Diversity Award. Many of our

professionals have given countless hours to both

their local chapters via leadership positions and

speaking engagements and campus chapters via speaking engagements and student interactions,

such as mock interviews. Additionally, DHG gave substantially to NABA through contributions nationally,

locally and via campus chapters. Other notable NABA awards in FY16 include NABA Charlotte Chapter’s

Outstanding Partnership Award and our Campus Recruiter, Stacey Ford, was awarded the NABA

Richmond Chapter Member of the Year Award. Involvement through time and funding in well focused

organizations like NABA, is a key component in our overall Inclusion and Diversity Strategy.

DHG has successfully built a pipeline of leadership succession so that we are always prepared for the next

generation of leaders. On May 31, 2016, Ken Hughes retired as Chairman. His retirement opened opportunities

for new leaders at many levels. From the Chairman position to the Office Managing Partner position, we were

fully prepared for cascading changes in leadership as the result of a clearly articulated succession plan.

Our succession plan is possible as the result of:

• Early career opportunities for leadership development

• Praxity Emerging Leaders Academy

• DHG Leadership Academy

• DHG succession planning

Our goal is to rotate our leaders in various positions so that when we are ready, the leader is prepared to step-

up to the next position. We continually encourage our people to take advantage of leadership opportunities

so that they can be part of our DHG pipeline for leadership.

FY16 Promotions

203

16 Newly Promoted Partners

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Both TEAMS and the Women

Forward Rainmaker Series

have shown me that it is all

about being your true self, building

a balanced team and serving a

prospect in the same manner we

strive to serve our clients.

–Katy Ensminger, Senior Associate

women forwardRainmaker Business Development Essentials Series

Women Forward Champions and Partner

Advocates delivered more than 70 sessions of

our Rainmaker Business Development Essentials Series across our footprint. The Rainmaker Series

focuses on foundational concepts of client development and client service, which then works in

tandem with our TEAMS approach. Nine-hundred DHG team members participated in the interactive

sessions on the “why” of business development, self-management, understanding the value ladder

and networking for success.

Celebrating Women’s History Month

We began Women’s History Month with the launch of a refreshed website – womenforward.com. From

Compass postings with videos featuring our women to a white paper by Ashley Ensley: “Successful

Women Leaders: Conversations about Career and Life”, DHG celebrated Women’s History Month by

sharing stories about our careers, people and flexibility. We consider this celebration a great success

and a step forward in communicating with others the value that women bring to our culture, our clients

and our communities.

2016 Engagement Survey Results

PSN: Professional Services Norm

89% FY15 | 80% PSN

voice FY16

PROUD TO WORK AT DHG90%

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growth

Growth has been a major focus over the past year and we are pleased to share that all of our regions

experienced positive growth. Twelve percent organic growth across the firm gives us great reason to celebrate

as it leads to career growth for our people and perpetuates the mission of DHG.

All industries, services and regions experienced growth. 12%GROWTH

2016 Engagement Survey Results

PSN: Professional Services Norm

87% FY15 | 77% PSN

voice FY16

BELIEVE DHG HAS AN OUTSTANDING FUTURE91%

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An expanded footprint and

expanded resources will help

our people grow in their careers

and help our clients get further, faster.

Thank you for welcoming us to the

DHG team.

–Conor Quinn, Managing Partner

WELCOME STEGMAN & COMPANY TO THE DHG TEAM

On June 1, 2016, we welcomed Stegman & Company to the DHG team. Stegman recently celebrated

their 100th anniversary and brings to DHG a rich tradition of experience and client service. They are

heavily focused in private client services, construction, real estate and financial services, which is

representative of several of our key industries. By adding Baltimore to our footprint, we are directly

supporting our growth strategy and our effort to go to market as an industry and services-based firm

from strategic geographic locations.

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performance

We cannot be a top performing firm without top performing people. Our DHG Voice Engagement Survey and

the annual Vault Accounting 50 survey are two ways that we can measure our performance. During the past

year we had strong improvements on both of these performance measures, reflecting positive results for our

Life Beyond Numbers people strategy which focuses on careers, flexibility and people.

VAULT ACCOUNTING 50 SURVEY RESULTS

DHG was ranked among the 10 best accounting firms by Vault. Additionally, we moved up in several

categories highlighted here:

2016 2015

Culture 7 8

Work Life Balance 5 11

Client Interaction 6 10

Satisfaction 5 9

Business Outlook 12 18

Diversity 15 20

VAULT ACCOUNTING 50 benchmarks accounting firms nationwide using a weighted formula that reflects the issues accounting professionals

care most about, combining quality of life rankings (such as culture, satisfaction, work/life balance, and compensation) with overall prestige.

Many prospective employees use this survey to compare firms when making career decisions.

2016 (#11 in 2015)

OVERALL RANKING#10

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TERRIFIC CULTURE

People really enjoy working together.

GREAT FLEXIBILITY

I am able to balance a career I love with my

family life.

TREMENDOUS LEADERSHIP

Leaders you can trust and leaders who inspire.

CHALLENGING WORK

If you want to be bored, look elsewhere, but

if you want to grow and be challenged, this is

the place!

–Glassdoor.com Review, May 2016

voice

Our annual engagement survey

helps us identify opportunities for

improvement. Last year we focused on

four key areas: connection to the DHG

Strategy, communications, recognition

and performance enablement. We are

pleased to share that we moved up in all

of these areas.

82% overall engagement score

DHG 2015: 78% PSN: 69%

82% performance enablement

DHG 2015: 79% PSN: 74%

82%leadership

DHG 2015: 77% PSN: 75%

91%of our people believe DHG has an outstanding future

We continue to develop new programs such as RAVE, our recognition and reward platform, as a direct

response to the survey findings. Here are some 2016 highlights:

CONNECTION COMMUNICATION RECOGNITION PERFORMANCE

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service

SPOTLIGHT: KNOWLEDGE SHARE + CAREER DEVELOPMENT

DHG’s Executive Briefing Series, which takes place in locations across our footprint, provides a great

opportunity for our professionals to build their leadership skills and share their knowledge on important

topics while providing clients and prospective clients with innovative ideas. Paul Morrow, Senior Tax

Associate, recently presented at our Memphis Executive Briefing event on tax changes in the state

and local tax environment. This is a great example of how knowledge share can impact career skills

development, beyond just technical skills, which benefit both our people and our clients.

IGNITE: THE DHG CLIENT EXPERIENCE

The 2015 engagement survey showed that our people desired an enhanced methodology for providing client

service and gathering client feedback. Over the past year, we embarked on a journey to develop the DHG

Client Service Methodology which we are calling Ignite. During the first phase of this project, a task force

worked to develop a baseline understanding of where we are today. The taskforce also identified an external

vendor-partner to help us develop and implement a client feedback program.

During the next phase of the project, the methodology will be developed and a learning curriculum to support

the experience will be implemented. We expect to roll-out later in the fiscal year.

KNOWLEDGE SHARE

As we continue to grow our knowledge share efforts, we identified the need for an enhanced strategy,

elevated quality of content and technology to manage the process. In FY 17, we will implement a solution

that increases transparency and facilitates communications during content development. Additionally, the

new technology solution will provide firm-wide access to finalized, published content supporting the ability

to cross-sell and share information with clients and prospects.

2016 RESULTS

74EVENTS

60WEBINARS

283KNOWLEDGE SHARE PIECES PRODUCED

149PUBLICATIONS

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As professional advisors, our individual

experiences working with clients mold

our approach to service, providing

the insights needed to deliver value.

The challenge and main value driver

is frequent adaptation through critical

listening and curiously learning while

facilitating collaboration to share

knowledge.

–Bryan Campbell, Senior Manager Excerpt from the Life at DHG blog: Innovate: Norfolk

THE CHALLENGE

Our audit team members submitted

their best practices in a variety of areas

to engage in friendly competition. We

received a total of 2,464 submissions.

The Challenge has helped us focus on

engagement management best practices and has enhanced our knowledge on how to efficiently and

effectively manage our business to be a top performing firm and deliver superior client service.

GRAND PRIZE WINNERS

Staff: JC Payne

Senior: Matt Davis

Manager: Allison Cohen

Partner: Ed Salek

This was my first presentation to a large group in a learning environment. I worked

to develop the content in a way that would resonate with the audience, taking highly

technical information and making it relatable. I definitely learned several things that

will enhance my presentation skills for future speaking engagements. It was truly a

great experience for me and I believe I shared valuable information for our clients.

Paul Morrow, Senior Associate

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gives

One of the major accomplishments over the past year was the launch of our DHG Gives website which

enables us to make donations online, share our individual and office philanthropic efforts and track our

volunteer hours.

We also announced the Community Impact Awards. Presented annually, these awards will celebrate the

impact our people are making across our communities through volunteer hours. Both the individual and

market that logs the most volunteer hours will win these prestigious awards which will be presented at our

annual partners meeting. We look forward to building a legacy of volunteerism at DHG as recognized through

our Community Impact Awards.

Additionally, in the coming year, we will implement a five year strategy for volunteerism and giving. See the

Corporate Citizenship section for more information.

$950,000TOTAL AMOUNT GIVEN

VIA THE DHG FOUNDATION

$779,000TOTAL CONTRIBUTIONS TO SCHOOLS including partner/employee contributions

and direct contributions from the DHG Foundation

$301,500TOTAL CONTRIBUTIONS FROM PARTNERS AND EMPLOYEES

WITH MATCHING FOUNDATION CONTRIBUTION

EMPLOYEE MATCHING CAMPAIGNS

American Heart Association – Wear Red Day

$5,000 American Red Cross South Carolina Flooding Relief

$12,120The Palmetto Project – Reverend Pinckney Fund

$14,700

of our people believe DHG is socially responsible

FY16 Engagement Survey89%24

UNIVERSITIES IMPACTED BY

DHG MATCHING FUNDS PROGRAM

$1,764,138SPONSORSHIPS PAID BY DHG

$220,442CONTRIBUTIONS UNDER $2,500 PAID BY DHG

non-school

25% of DHG posted photos on our social networks wearing red

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Count the Cans started in 2011 as a way for the firm to promote teamwork while making an impact on the

community, and today, it continues to achieve those goals while also encouraging friendly competition across

all DHG markets and regions. Rather than planning Count the Cans around the holiday season, we choose

to hold the highly-anticipated event during the summer months when food banks and similar organizations

have an increased need for donations because children who rely on school meals are out of school. In 2016,

Count the Cans produced 593,464 pounds of food and we increased our cumulative donation over five years

to 3,795,814 pounds of food.

In addition to our collection of canned goods, dollars and volunteer

hours for hunger relief organizations, in 2016, we also collected

monetary donations for the OneOrlando Fund and the American Red

Cross West Virginia Region in response to the Pulse nightclub tragedy

and the devastating West Virginia floods. With both tragedies occurring

in the middle of Count the Cans, we extended the campaign by one

week and encouraged our people to donate to these organizations in

exchange for Count the Cans points. The DHG Foundation offered to match employee donations, and in total,

we donated $14,742 to the OneOrlando Fund and $22,000 to the American Red Cross West Virginia Region.

2016 COUNT THE CANS RESULTS:

count the cans

The damage (in West Virginia) has been devastating. We didn’t really know the

severity of the damage or storms as we collected items yesterday. The food bank

representative that was with us all day couldn’t even make it back home last night as

the interstate was shut down. The food bank is about an hour away from Charleston.

This collection day and the Count the Cans food drive will have a great and immediate

impact on our WV neighbors in need.

–Brooke Lord, Marketing Manager

593,464 POUNDS OF FOOD

10,555 TUNA CANS

12,020POUNDS OF PET FOOD

1,153SERVICE HOURS

233,294TOTAL POINTS

Firm-wide Goal was 177,322 Points

3,795,814POUNDS OF FOOD

Cumulative Results over 5 Years

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corporate citizenship

One of the special things about DHG is our genuine commitment to the well-being of our people, our

communities and our profession, directly supporting our Life Beyond Numbers. And what makes this

commitment truly extraordinary is that it is driven by all of you – our people. Together, we do many great things

across our footprint and desire to grow and enhance our efforts related to Inclusion & Diversity, philanthropy,

volunteerism, employee wellness and our environment.

In the coming months, you will begin hearing more about DHG Corporate Citizenship. This is not a new

initiative, but rather a strategic focus on key areas that are important to you to help us prioritize, enhance

and communicate about the good things that we are doing. Our methodology is to recognize and reward

our employee volunteers and support our broader community in a way that aligns with our mission, values

and strategy. Our DHG Corporate Citizenship strategy is being led by Kent Satterfield, Chairman, and Tricia

Wilson, Regional Managing Partner, Carolinas Region. Both Kent and Tricia have post graduate diplomas

from Furman University in Corporate Sustainability.

DHG Corporate Citizenship:

• Promotes Inclusion & Diversity

• Supports colleges and universities within our footprint

• Supports our communities through volunteerism and financial support

• Promotes wellness programs and initiatives

• Promotes sustainability and conservation efforts

Our focus on Inclusion & Diversity, Women Forward and college and university support are well underway as

evidenced by articles in this report. Here are a few other highlights of our strategic direction:

Volunteerism and Financial Support of Our Communities

During this past year, the DHG Foundation Advisory Board undertook a study to help develop

a five-year strategic plan for our philanthropic efforts. A recent DHG Voice Philanthropy Survey

helped us better understand what matters most to our people in regards to giving and volunteering.

In the coming year, we will begin executing on this strategy. Stay tuned for exciting developments.

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Wellness

Energy for Life provides tools to enhance our Life Beyond Numbers strategy focused on

careers, people and flexibility. This program teaches our people the concepts of energy

management: how to define their personal mission and develop the skills necessary to

achieve an extraordinary life. We have piloted this program and have trainers who have

completed Corporate Athlete coursework at Johnson & Johnson’s Human Performance

Institute. Over the next two years, we will roll-out Energy for Life with a goal to have everyone

through the program within the next two years.

Sustainability and Conservation

Sustainability and Conservation is an area that we will continue to build upon in the coming

year. A major consideration in recent office moves has been LEED certification and we will

continue to make this a significant consideration for future moves. Additionally offices are

taking steps to reduce waste and conserve energy where possible. Our Charleston, SC

office is paving the way in this area by entering a Green Challenge in their community. Learn

more about their efforts in podcast episode 11: We Love Our Mother Earth.

[Philanthropic] commitments may require time away from the office, but the rewards are so much greater both personally and professionally. I’ve grown my professional network and improved my executive presence. I come back to the office refreshed and inspired to do my best for my clients, my staff and my community.

–Eric Curran, Senior Manager Excerpt from the Life at DHG blog: Integrating Philanthropy into My Career

@LifeatDHG

@LifeatDHG

Life at DHG

Dixon Hughes Goodman

Dixon Hughes Goodman

Dixon Hughes Goodman LLP

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