Exhibit 10

FAMILY DOLLAR STORES, INC.

2006 INCENTIVE PLAN

Guidelines for Annual Cash Bonus Awards

1.             Purpose

Family Dollar Stores, Inc. (the “Company”) maintains for the benefit of eligible
individuals the Family Dollar Stores, Inc. 2006 Incentive Plan (the “Plan”),
which is intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of such individuals upon whose
judgment, interest, and special effort the successful conduct of the Company’s
operation is largely dependent.  These Guidelines for Annual Cash Bonus Awards
(the “Guidelines”) are intended to implement the Plan by providing eligible
Associates of the Company an opportunity to participate in the Company’s success
by earning annual incentive compensation in the form of a cash bonus based on
the Company’s achievement of pre-tax earnings goals and the Associates’
contributions to meeting such goals.

These Guidelines are adopted pursuant to relevant provisions of the Plan and are
to be interpreted and applied in accordance with the terms and provisions
thereof.  Specifically, these Guidelines provide for the grant of
Performance-Based Cash Awards under Article 9 of the Plan and, with respect to
Covered Employees, the grant of Qualified Performance-Based Awards under Article
14 of the Plan.  Unless otherwise provided herein, capitalized terms used in
these Guidelines will have the meaning given such terms in the Plan.

2.             Scope

The Guidelines cover eligible Associates as described in Section 3 of these
Guidelines.  The Guidelines cover the Company’s fiscal (not calendar) year that
is the 12-month period that generally runs from approximately September to
August.  The actual dates for the fiscal year are determined and announced by
the Company prior to the beginning of each fiscal year.

3.             Eligibility

Eligibility for participation in the Plan under these Guidelines shall be
determined by any of the Chairman and Chief Executive Officer, the President or
the Senior Vice President, Human Resources (or their designees) and communicated
to department heads.  Additional eligibility requirements are as follows:

·                  An Associate must be classified as a regular, full-time
employee for the entire fiscal year or the Associate’s entire employment period
in the fiscal year if the Associate was hired subsequent to the beginning of the
fiscal year.

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·                  An Associate must be hired and on the active payroll as a
full-time employee as of the first business day after May 31 of the applicable
fiscal year in order to participate during that fiscal year.

·                  If an Associate, whose position was previously not identified
as eligible for participation in the Plan under these Guidelines and who was
eligible to participate in another bonus plan, is promoted to a position
eligible to participate in the Plan under these Guidelines during the relevant
fiscal year, such Associate will participate in each plan, subject to its
conditions, on a prorated basis.  The prorated calculation will be based upon
the number of weeks and respective salary in each position.

·                  If an Associate’s position is changed during the relevant
fiscal year and as a result of that change the bonus percentage applied in his
or her individual bonus calculation under these Guidelines is affected, such
Associate will participate on a prorated basis at each bonus percentage level
based upon the number of weeks and respective salary in each position.

·                  Except as otherwise provided below, an Associate must be on
the payroll in a regular, full-time, active status when bonus checks are issued
in order to receive payment under these Guidelines.  An Associate on leave of
absence, regardless of type, will receive the bonus payment only upon return to
regular, full-time, active status; provided, however, that Associates on a
Company approved family medical leave or approved military leave will be issued
payment at the time bonus checks are issued even if they have not returned to
regular, full-time, active status at that time.

·                  An Associate whose employment with the Company terminates for
any reason, other than death or termination of employment due to Disability or
Retirement, prior to the issuance of bonus checks will forfeit any bonus such
Associate otherwise would have been entitled to receive.

·                  An Associate who dies or terminates employment due to
Disability or Retirement after the end of the fiscal year but before the
issuance of bonus checks will not forfeit the bonus which the Associate would
have otherwise been entitled to receive.

·                  An Associate who dies or terminates employment due to
Disability during a fiscal year will participate on a prorated basis in the
bonus program based upon the number of weeks of employment with the Company
during such fiscal year and based upon an assumed performance rating of
Satisfactory.

·                  An Associate who terminates employment due to Retirement
during a fiscal year will participate on a prorated basis in the bonus program
based upon the number of weeks of employment with the Company during such fiscal
year; provided that the Associate’s term of employment is at least one-half of
the fiscal year.  An Associate who terminates employment due to Retirement in
the first half of the

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fiscal year will not receive any bonus amounts pursuant to these Guidelines for
such fiscal year.

·                  These Guidelines do not in any manner restrict the right of
the Company or the Associate to terminate employment at any time, for any
reason, with or without cause.

·                  An Associate otherwise meeting all of the eligibility
requirements of these Guidelines, but whose performance rating for the fiscal
year is at the Unsatisfactory/Does Not Meet Expectations level, will not
participate in the Plan under these Guidelines or be eligible for bonus for that
fiscal year.

4.                                      Target Bonus Amount and Adjustments for
Performance

The target bonus amount for an Associate under these Guidelines equals a
percentage of the Associate’s base compensation received in the relevant fiscal
year, generally ranging from 10% to 100%.  (See above for changes in the
Associate’s position during the fiscal year.)  The applicable percentage for an
Associate will be established by Human Resources and communicated to department
heads.  The actual bonus amount for the fiscal year, if any, will be determined
as a percentage of the target bonus amount depending on Company and individual
performance as follows:

A.                                   Company pre-tax earnings vs.  Target

·                  The Board of Directors of the Company determines prior to, or
within 90 days after the beginning of, each fiscal year a pre-tax earnings goal
for the fiscal year.

·                  In addition, under relevant provisions of the Plan, the
pre-tax earnings goal for the relevant fiscal year may be further adjusted to
reflect extraordinary events or circumstances affecting the Company or its
business, which render such goal unsuitable.

·                  Achievement of the pre-tax earnings goal determines the first
part of the bonus calculation under these Guidelines.  Achievement at the 100%
level would provide for payment at the Guidelines’ “target” payout percentage (a
percentage of the Associate’s base salary times an established individual
performance multiplier – See B below).

·                  If the pre-tax earnings goal is exceeded, the target bonus
amount will increase by 2% for each 1% by which the goal is exceeded, to a
maximum of 50% additional bonus for exceeding the goal by 25%.

·                  If the pre-tax earnings goal is not achieved, the target
bonus amount will decrease by 5% for each 1% by which the goal is not achieved,
with no bonus being payable if pre-tax earnings are less than 90% of the goal.

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B.                                     INDIVIDUAL ASSOCIATE PERFORMANCE LEVEL
FOR THE FISCAL YEAR AS DETERMINED ON A FIVE POINT RATING SCALE AND THE INCENTIVE
GROUPING / POSITION LEVEL OF THE ASSOCIATE.

·                  A performance multiplier is applied to the target bonus
amount for which an individual Associate is eligible, as determined by the
Associate’s position level.  The multiplier is determined using two factors:
individual performance level and incentive level grouping as determined by
position.

·                  Six incentive groupings have been established based upon
position levels within the Company.  The higher the position level, the more
heavily weighted the Company pre-tax earnings performance becomes.  The
following ratios are used to establish the multiplier:

1.  Incentive Group 1

80/20 (80% individual performance, 20% Company performance)

2.  Incentive Group 2

60/40 (60% individual performance, 40% Company performance)

3.  Incentive Group 3

40/60 (40% individual performance, 60% Company performance)

4.  Incentive Group 4

20/80 (20% individual performance, 80% Company performance)

5.  Incentive Group 5

10/90 (10% individual performance, 90% Company performance)

6.  Incentive Group 6

100% (100% Company performance), subject to additional rules set forth below.

·                  A matrix is developed annually by the Company that
incorporates the Company payout ratio, the incentive groups outlined above, and
the eligible individual performance ratings ranging from Outstanding (Exceeds
Expectations) to Needs Improvement (Meets Most Expectations).  The resulting
multiplier is a function of these elements and is reflective of individual
eligibility and performance level.

C.                                     Qualified Performance-Based Awards

Notwithstanding anything in these Guidelines to the contrary, the following
provisions will apply to any Associate who is a Covered Employee for purposes of
benefiting from the Section 162(m) Exemption applicable to Qualified
Performance-Based Awards under Article 14 of the Plan.  Please refer to the Plan
document for further information.

·                  All determinations under these Guidelines will be made by the
Committee which, pursuant to section 4.1 of the Plan, will consist of all the
members of the Compensation Committee who are “outside directors” within the
meaning or Section 162(m) of the Code.

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·                  The Committee will establish the target bonus amount for each
Associate covered by this Section 4.C and the pre-tax earnings goal for the
fiscal year.

·                  Notwithstanding the foregoing, the Committee will adjust the
pre-tax earnings goal for the fiscal year with respect to each Associate covered
by this Section 4.C to adequately reflect the occurrence, during such fiscal
year, of any of the events described in Section 14.4 of the Plan.

·                  Payment of any cash bonus under these Guidelines to any
Associate covered by this Section 4.C is conditioned upon the written
certification of the Committee that the performance goals and any other material
conditions applicable to such award were satisfied.

·                  The Committee will retain the discretion to decrease, but not
increase, the amount of any cash bonus otherwise payable to any Associate
covered by this Section 4.C in accordance with the applicable performance
formula described above.  Specifically, with respect to any Associate covered by
this Section 4.C who is not a member of the Incentive Group 6 described above
(and whose bonus therefore is calculated in part on the basis of the Associate’s
individual performance), the Committee will use the Associate’s individual
performance level for the relevant fiscal year solely for purposes of decreasing
(to the extent permitted by the performance formula described above) the amount
of any cash bonus otherwise payable to the Associate, if the Committee deems it
appropriate in its discretion.

·                  In no event will the amount of any cash bonus otherwise
payable to any Associate covered by this Section 4.C in accordance with the
applicable performance formula described above exceed $1,000,000.

·                  Payment of any cash bonus under these Guidelines to any
Associate covered by this Section 4.C is conditioned upon the Plan having been
previously approved by the shareholders of the Company.

6.             Additional Rules

·                  Notwithstanding anything in these Guidelines to the contrary,
the total annual bonus pool available for awards made pursuant to these
Guidelines to participating Associates in the relevant fiscal year shall be
determined by the Committee (subject to the rules described above relating to
Qualified Performance-Based Awards) after the end of such fiscal year, and will
in no event exceed 5% of the net profit realized by the Company and its
subsidiaries during such fiscal year, computed on a consolidated basis
determined in accordance with the generally accepted accounting principles,
before any deduction for federal or state income taxes and before any deduction
in respect of, or provision for, (i) appropriations or distributions made or to
be made under these Guidelines, or (ii) payments

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made to officers or other employees under any agreement or other arrangements
based upon or relating to profits of the Company or any of its subsidiaries,
years of service with the Company or any of its subsidiaries or performance of
the Company’s retail stores; provided that the Committee may make the same
adjustments to such net profit as may be made by the Committee with respect to
the pre-tax earnings goal to recognize or to exclude any adjustment as set forth
in Section 14.4 of the Plan.

·                  Bonuses earned under these Guidelines are expected to be paid
within seventy-five (75) days following the end of the month in which the fiscal
year comes to an end.

·                  All bonus payments under these Guidelines are considered
supplemental pay and will be taxed as such.  Appropriate withholding and
deductions will be taken from such payments.  Percentages will be rounded to the
nearest 1/10 of a percent (for example, 10.3%).  Amount of bonus will be rounded
up to the nearest whole dollar.

·                  The amount of an Associate’s earnings for the fiscal year
which have actually been paid to the Associate will be used in determining the
calculation.  This calculation excludes the salary elements for Company
Aircraft, Company Car, GTL Imputed Income, or any bonus payments issued during
the fiscal year.

·                  These Guidelines cannot be changed or modified by a verbal
communication or course of dealing, but only by a written communication signed
by the Chairman, Chief Executive Officer or President of the Company.

·                  In the event of major economic changes, catastrophic events,
or any other circumstances not contemplated by the Company (but subject to the
rules described above relating to Qualified Performance-Based Awards), the
Committee reserves the right to alter, amend, or terminate these Guidelines and
any awards hereunder.

·                  The Chairman, Chief Executive Officer or President of the
Company will make all final decisions, rulings and interpretations under these
Guidelines (subject to the rules described above relating to Qualified
Performance-Based Awards, which may require action by the Committee).  By
participating in the Plan under these Guidelines, each Associate agrees that
such decisions, rulings and interpretations will be final and that each
Associate will be bound by them.  Each Associate further agrees that if and when
any circumstances arise relating to these Guidelines which are not covered by
this description of the Plan, the Associate will be bound by the final decision,
ruling or interpretation of the Chairman, Chief Executive Officer or President
of the Company.

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Adopted by the Compensation Committee: October 3, 2006

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