SUMMARY OF THE DIXIE GROUP, INC

2002 LEADERSHIP AND PERFORMANCE INCENTIVE AWARD PLAN

 

The Company's 2002 leadership and performance incentive award plan permits the
award of bonuses to participants based on predetermined levels of earnings
before interest and taxes from continuing operations ("EBIT") and on individual
performance. The plan is administered by the Compensation Committee of the Board
of Directors that establishes the incentive compensation potential, expressed as
a percentage of base compensation for each participant for various levels of
EBIT for each of the Company's operating divisions and in the case of corporate
associates, results of the Company and individual performance criteria. The
Chairman of the Company, makes recommendations to the Compensation Committee to
assist it in establishing the various parameters of the Plan. Up to fifty
percent of the incentive award potential can be earned by participants if the
actual EBIT earned by the division or Company, as the case may be, equals or
exceeds the predetermined EBIT goal and the associate's individual performance
meet performance goals which may be subjective. The remaining fifty percent of
the management incentive award is discretionary. The Compensation Committee of
the Board of Directors approves the management incentive plan and awards issued
pursuant to the plan. Management incentive awards are paid in cash to
participants on or prior to March 15th following each fiscal year of the
Company.