EXHIBIT 10.1

SUMMARY DESCRIPTION OF THE DIXIE GROUP, INC.

2008 ANNUAL INCENTIVE PLAN

The following is a description of the Company’s 2008 Incentive Plan (“Plan”) for
its executive officers (including all individuals who are “named executive
officers” for purposes of the Summary Compensation Table disclosures required in
the Company’s annual Proxy Statement).

Cash Incentive Awards

For the CEO and all executive officers whose responsibilities are primarily
related to corporate-level administration, the Cash Incentive Award component
provides each participant with the opportunity to earn a cash incentive ranging
from 10% to 75% of such participant’s base salary.  For executive officers in
this category, 70% of the amount of the Cash Incentive Award is determined based
on the achievement of specified levels of annual earnings before interest and
taxes (“EBIT”) for the Company’s business units, as adjusted for unusual items
and 30% of the amount is determined based on the achievement of specified levels
of the Company’s consolidated annual EBIT, as adjusted for unusual items.  The
committee may reduce the amount of any award by up to 30% of the amount
otherwise earned based on the participant’s failure to achieve individual
performance goals set by the Committee.

For executive officers whose responsibilities are primarily related to one of
the Company’s business units, the Cash Incentive Award component provides each
participant with the opportunity to earn a cash incentive ranging from 10% to
75% of such participant’s base salary.  For executive officers in this category,
70% of the amount of the Cash Incentive Award is determined based on the
achievement of specified levels of their annual business unit EBIT, as adjusted
for unusual items and 30% of the amount is determined based on the achievement
of specified levels of annual EBIT of the Company’s other business units and the
Company’s consolidated EBIT, as adjusted for unusual items.  The Committee may
reduce the amount of any award by up to 30% of the amount otherwise earned based
on failure of the participant to achieve individual performance goals set by the
Compensation Committee.

Incentive Awards earned under the Plan will be based on the participant’s base
salary as established by the Compensation Committee, and will be paid to
participants in cash on or prior to March 15, 2009; provided, that the executive
must be employed by the Company at the time of payment of the award.

Primary Long-Term Incentive Awards and Career Shares

A Primary Long-Term Incentive Award will be made in restricted shares to each
executive officer, the value of which will be equal to 35% of the executive’s
base salary plus any Cash Incentive Award paid for such year.  Career Shares
will be awarded to each executive officer as an award of restricted stock valued
at 20% of such officer’s base salary.  Such awards will be valued based on the
market price of the Company’s

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common stock at the time of grant of the award.

Primary Long-Term Incentive Awards will vest over 3 years, and career shares
will vest when the participant becomes (i) qualified to retire from the Company
and (ii) has retained the career shares for 24 months following the grant date,
subject to accelerated vesting or forfeiture as described below.  For any
participant who becomes age 60 (or any participant who is already age 60 at the
time of an award) restricted shares will vest equally over the stated vesting or
retention period (three years in the case of Primary Long-Term Incentive awards
and two years in the case of Career Shares awards; provided, that in no case
will such awards be issued later than two and one half months following the year
in which such awards vests or are no longer subject to substantial risk of
forfeiture.

Special Conditions to Awards

The Primary Long-Term Incentive Awards and Career Share awards will only be made
if the Company is profitable.  Death, disability or a change in control of the
Company will cause immediate vesting of all restricted stock issued as Career
Shares and as Primary Long-Term Incentive share awards.  Termination without
cause will result in immediate vesting of all Career Share Awards, and
acceleration of vesting of Primary Long-Term Incentive Share Awards to the
extent such shares have been expensed by the Company. Voluntary termination of
employment prior to retirement, or termination of employment for cause will
result in the immediate forfeiture of all unvested awards under the Plan.  Upon
an executive’s retirement vesting will accelerate to the extent that the Company
has recognized compensation expense related to the shares.

Compensation Committee Oversight of Payments

The Compensation Committee has the authority to review and certify the
achievement of the performance goals and to administer and interpret the
Incentive Compensation Plan.  As set forth above, any award to a participant for
2008 may be reduced, but not increased, by the Compensation Committee in its
sole discretion based on individual performance criteria.