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                                                                 Exhibit 10.26.2


                             CONE MILLS CORPORATION
                   2002 EXECUTIVE INCENTIVE COMPENSATION PLAN


1.    Purpose. The purpose of the Cone Mills Corporation (the "Company") 2002
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Executive Incentive Compensation Plan (the "Plan") is to enable the Company to
attract, retain, motivate and reward those corporate and division executives and
other key employees who are in a position to make a significant contribution to
the Company's success by providing them with an annual at-risk (i.e.,
non-guaranteed) compensation opportunity related to achieving significant
pre-established performance objectives.

2.    Plan Administration. The Compensation Committee of the Board of Directors
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of the Company or such other Committee of the Board as the Board shall designate
(the "Committee") shall administer the Plan in accordance with its provisions.
The Committee shall consist of no less than two persons, and all Committee
members must be "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The interpretation and
construction of the Plan by the Committee shall be final and binding on all
persons, including the Company and the Participants.

3.    Participation. Corporate and division executives and other key employees
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who are designated by the Committee as participants in the Plan are eligible to
participate in the Plan (a "Participant"). A "key employee" is an employee of
the Company or any subsidiary who, in the judgement of the Committee acting in
its absolute discretion is key to the business performance and success of the
Company. In order to earn an incentive payment under the Plan ("Incentive
Compensation") for a Performance Period, a Participant must maintain employment
in the same or a similar job throughout that Performance Period (as hereafter
defined). No vesting of Incentive Compensation occurs; a Participant whose
employment with the Company terminates during a Performance Period or thereafter
before his or her Incentive Payment is made ceases eligibility under the Plan
for such Performance Period. Corporate and division executives and other key
employees who join the Company during a Performance Period may participate in
the Plan on a pro-rata basis for that Performance Period with the approval of
the Committee, based upon the Performance Objectives (as hereafter defined)
established in accordance with Section 6 of this Plan for the employment
position that such Participant assumes. Participation in the Plan creates no
guaranty of continued employment with the Company.

4.    Amount of Incentive Compensation. A Participant may earn Incentive
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Compensation in an amount established by the Committee as a percentage of his or
her Base Compensation during the Performance Period for which the Incentive
Compensation is made. "Base Compensation" means a Participant's regular salary,
excluding Incentive Compensation, discretionary bonuses or employee benefits for
the Performance Period. Base Compensation shall include, unless the Committee
excludes in its sole discretion, any increase in compensation granted to
Participants by the Committee during the Performance Period but in no event
shall Incentive Compensation for any Participant exceed the amount that is tax
deductible under Section 162(m) of the Code.

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5.    Performance Period. Performance Period means a period of time
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established under this Plan within which the Performance Objectives relating to
Incentive Compensation are to be achieved. The Performance Period shall be the
Company's fiscal year, unless otherwise determined by the Committee.

6.    Performance Measurement. Not later than forty-five (45) days following
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the beginning of each Performance Period, the Committee will establish in
writing the following:

      (a)   A minimum level of performance by the Company ("Circuit Breaker")
      before which any incentives can be paid to any Participant. The
      Performance Measure for the Circuit Breaker will be based upon one or
      more, or a combination of, the Performance Objectives set forth in
      paragraph (c) below. Any extraordinary accounting item, accounting for
      discontinued operations, and the cumulative effect of accounting change
      that have the effect of reducing net income shall be excluded in
      determining the achievement of the Circuit Breaker unless the Committee in
      its absolute discretion, determines to include such items in the aggregate
      or separately.

      (b)   The business criteria ("Performance Objective") which shall be the
      basis of the measurement of performance for the Performance Period for the
      Company and its divisions or subsidiaries. The Performance Objectives
      shall be selected from one or more, or a combination thereof, of the
      measurements set forth in paragraph (c) below. The Committee shall set in
      its absolute discretion the minimum, maximum and target levels of
      performance for the Performance Period for the Company and its divisions
      or subsidiaries, as determined with reference to the Company's
      consolidated financial statements for the Performance Period.

      (c)   Performance Objectives are intended to qualify as "performance-based
      compensation" under Section 162(m) of the Code and shall be limited to
      specific levels of, or increases in, the respective market share; sales;
      costs; market capitalization; return on equity; earnings per share;
      earnings before interest, taxes, depreciation and amortization (EBITDA);
      earnings growth; return on capital; return on assets; divisional return on
      capital; dividend; return on net assets; and total shareholder return of
      the Company or its divisions or subsidiaries. Performance Objectives may
      be described in terms of Company-wide objectives or objectives that are
      related to the performance of a division, department or function within
      the Company or subsidiary in which a Participant is employed. Performance
      Objectives may be related to and measured against specific levels of
      performance of a pre-determined peer group of the Company based on one or
      more of the criteria listed in this sub-paragraph.

      (d)   The percentage of Incentive Compensation opportunity that may be
      earned by each Participant based on the level of success within the
      pre-established range in achieving the established Performance Objectives.

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In accordance with Section 162(m) of the Code, all Performance Objectives must
be (i) based upon objective formulae and standards and (ii) substantially
uncertain of attainment at the time they are established.

7.    Performance Definitions. For purposes of Section 6 of this Plan, the
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following terms shall have the definitions indicated:

      (a)   "Return on capital employed" means corporate consolidated operating
      earnings of the Company before interest and taxes adjusted for any
      discount on sale of accounts receivable and adjusted for equity in
      earnings or losses of Unconsolidated Affiliates divided by average Net
      Current Cost Investment. Net Current Cost Investment is defined as the
      current cost of total assets less non-interest bearing liabilities.

      (b)   "Divisional return on capital employed" means operating earnings of
      the division or other operating unit, and allocated operating earnings of
      Unconsolidated Affiliates divided by current cost of assets of, or
      allocated to, the division or operating unit, including current cost of
      assets of Unconsolidated Affiliates allocated to the respective division
      or operating unit.

      (c)   "Earnings per share" means consolidated net income of the Company
      for a fiscal year less dividends on Class A Preferred Stock, divided by
      the weighted average common shares and common shares equivalents
      outstanding on a fully diluted basis.

      (d)   "Return on equity" means consolidated net income of the Company
      divided by average shareholders' equity.

      (e)   "Divisional return on net assets" means operating earnings of the
      division or other operating unit, including allocated earnings of
      Unconsolidated Affiliates, divided by current cost assets net of
      non-interest bearing liabilities of, or allocated to, the division or
      operating unit, including current cost of assets net of non-interest
      bearing liabilities of Unconsolidated Affiliates allocated to the
      respective division or operating unit.

      (f)   "Unconsolidated Affiliates" is as defined by accounting principles
      generally accepted in the United States of America as recognized by the
      American Institute of Certified Pubic Accountants and Financial Accounting
      Standards Board, consistently applied.

            Any extraordinary accounting item, accounting for discontinued
      operations, and the cumulative effect of accounting change that have the
      effect of reducing operating earnings for "return on capital employed" or
      for "return on net assets" or net income for "earnings per share" or
      "return on equity" shall be excluded in determining operating earnings or
      net income unless the Committee, in its absolute discretion, determines to
      include such items in the aggregate or separately.

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8.    Payment of Earned Incentive Compensation. After the end of the Performance
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Period for which Performance Objectives have been established, the Committee
shall determine whether, and the extent to which, the Performance Objectives
have been achieved and shall certify in writing its determinations and the
specific Incentive Compensation payable to each Participant, which certification
shall be contained in the approved minutes of the Committee, or in a certificate
signed by all members of the Committee, and retained with the corporate records
of the Company. The Committee shall have discretion to decrease, but not to
increase, any Incentive Compensation payable under the Plan in accordance with
the Performance Objectives. All Incentive Compensation will be paid in cash in a
lump sum based on the Committee's certificate.

9.    Funding. The Plan is intended to constitute an  "unfunded"  plan. With
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respect to any Incentive Compensation not yet made by the Company, nothing set
forth in this document shall give any Participant any rights other than those of
a general creditor of the Company.

10.   Death, Disability and Change of Control. In the event of the death or
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total and permanent disability of a Participant or a Change of Control of the
Company as hereafter defined, the Committee shall determine Incentive
Compensation in accordance with this Plan, prorating, however, all Performance
Objectives based on the percentage of the year completed as of the date of the
death, disability or Change of Control, as the case may be, and, provided
further, that expenses directly related to any Change of Control shall be
disregarded for purposes of determining whether or not the Incentive
Compensation has been earned.

For purposes of this Plan, a "Change of Control" means the occurrence of any of
the following:

      (a)   the Company is merged or consolidated or reorganized into or with
            another corporation, person or entity (including, without
            limitation, a merger in which the Company is the surviving entity)
            and, as a result of such transaction, the holders of the Company's
            Common Stock immediately before the transaction, as a group, hold
            less than 50% of the combined voting power of the outstanding
            securities of the surviving entity immediately after the
            transaction;

      (b)   the Company's Common Stock is acquired in a share exchange pursuant
            to Section 55-11-02 of the General Statutes of North Carolina and,
            as a result of such transaction, the holders of the Company's Common
            Stock immediately before the transaction, as a group, hold less than
            50% of the combined voting power of the outstanding securities of
            the acquiring corporation immediately after the transaction;

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      (c)   the Company sells or otherwise transfers assets having an aggregate
            fair market value (as determined in good faith by the Board of
            Directors of the Company) of more than 50% of the Company's total
            assets, as reflected on the most recent audited consolidated balance
            sheet of the Company, and, as a result of such transaction, neither
            the Company nor the holders of the Company's Common Stock
            immediately before the transaction, as a group, hold 50% or more of
            the combined voting power of the outstanding securities of the
            transferee immediately after the transaction;

      (d)   there is a report filed on Schedule 13D or Schedule 14D-1 of the
            Securities Exchange Act of 1934, as amended (the "Exchange Act"), by
            a person (other than a person that satisfies the requirements of
            Rule 13d-1(b)(1) under the Exchange Act for filing such report on
            Schedule 13G), which report as filed discloses that any person (as
            the term "person" is used in Section 13(d) and Section 14(d) of the
            Exchange Act) has become the beneficial owner (as the term
            "beneficial owner" is defined under Rule 13d-3 under the Exchange
            Act) of securities representing more than 50% of the Company's
            Common Stock (whether by purchase, recapitalization of the Company
            or otherwise); or

      (e)   if during any period of two consecutive years, individuals who at
            the beginning of such period constituted the Board of Directors of
            the Company cease for any reason to constitute at least a majority
            thereof, unless the election, or the nomination for election by the
            Company's shareholders, of each director of the Company first
            elected during such period was approved by a vote of at least
            two-thirds of the directors of the Company then still in office who
            were directors of the Company at the beginning of any such period.
            Notwithstanding the foregoing, a Change of Control shall not be
            deemed to have occurred for purposes of the Plan if the Company or
            any Company-sponsored employee benefit plan (or any trustee of any
            such plan on its behalf) files or becomes obligated to file a report
            or proxy statement disclosing beneficial ownership by a
            Company-sponsored employee benefit plan of more than 50% of the
            Company's Common Stock

11.   Term.  The term of the Plan shall be for the fiscal years beginning on
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December 31, 2001 and ending on December 31, 2006 unless sooner  terminated by
the Board of Directors.

12.   Compliance with Section 162(m). This Plan is intended to comply with the
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provisions of Section 162(m) of the Code, as amended, and the regulations
promulgated thereunder, and the Committee is authorized and directed to make
such interpretations hereunder and take such other action as it deems
appropriate in order to assure such compliance.

13.   Amendments  and  Termination.  The Board of Directors of the Company may
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amend,  alter  or  discontinue  the  Plan at any  time,  and  such  amendment,
alteration or discontinuance will be binding upon all Participants.

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14.   Not Exclusive. Nothing set forth in the Plan shall prevent the Company
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from adopting other or additional compensation arrangements, subject to
shareholder approval or approval of the Board of Directors, if such approval is
required; and such arrangements may either generally be applicable or applicable
only in specific cases.

15.   No Liability. No members of the Board of Directors or of the Committee,
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nor any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and every officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company with respect to such action,
determination or interpretation.

16.   Applicable Law. The validity, interpretation and administration of the
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Plan and of any rules, regulations, determinations or decisions made hereunder,
and the rights of any and all persons having or claiming to have any interests
hereunder or thereunder, shall be determined exclusively in accordance with the
laws of the state of North Carolina. Without limiting the generality of the
foregoing, the period within which any action in connection with the Plan must
be commenced shall be governed by the laws of North Carolina.

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