Exhibit 10.21






                         STANLEY FURNITURE COMPANY, INC.

                        2005 INCENTIVE COMPENSATION AWARD

Participant:   Jeffrey R. Scheffer

         This Award,  dated as of December  15,  2004,  is made  pursuant  and
subject to the  provisions  of the Stanley Furniture Company, Inc. 2000
Incentive Compensation Plan.

         1. Purpose. The purpose of the 2005 Incentive Compensation Award is to
provide an annual performance-based incentive for designated officers by
offering them an opportunity to earn additional shares of Stanley Furniture
common stock ("Company Stock") based on performance criteria. The Award is made
pursuant to Section 8 of the Stanley Furniture Company, Inc. 2000 Incentive
Compensation Plan (the "Plan") and all capitalized terms not otherwise defined
shall have the same meaning as in the Plan.

         2. Definitions. The following terms will have the meaning indicated:

                  (a) "Award" means this award setting forth the terms and
         conditions applicable to an Award granted to the Participant, including
         Exhibit A.

                  (b) "Committee" means the Compensation Committee of the Board
of Directors of Stanley.

         3. Award. An Award shall be payable for fiscal year 2005 to the
Participant upon the satisfaction of the Performance Goal stated on Exhibit A.
In the event of any conflict between this Award and the Plan, the terms of the
Plan shall govern. All determinations regarding the achievement of any
Performance Goal will be made by the Committee. The Committee may not increase
the amount of Common Stock that would otherwise be payable upon achievement of
the Performance Goal or Goals but may reduce or eliminate the payments at its
discretion.

                  (a) All calculations of actual payments shall be made by the
         Committee and the Committee shall certify in writing the extent, if
         any, to which the Performance Goal has been met.

                  (b) The Award will be paid in Company Stock as soon as
         practicable after the performance is certified by the Committee.

                  (c) The Participant agrees as a condition of receiving this
         Award to pay to the Company, or make arrangements satisfactory to the
         Company regarding the payment to the Company of, Applicable Withholding
         Taxes. Until such amount has been paid or arrangements satisfactory to
         the Company have been made, no stock certificate shall be issued to
         such Participant. To fulfill the withholding obligation, the
         Participant is entitled to receive an additional payment (a "Gross-Up
         Payment") in an amount such that, after payment by the Participant of
         all federal and state income and employment taxes imposed upon the
         Award and the Gross-Up Payment, the Participant receives a Gross-Up
         Payment equal to the federal and state income and employment taxes
         imposed and that Gross-Up Payment shall be withheld by the Company.

         4. Administration. The Award is administered by the Committee. It is
the intent of the Committee that this Award satisfies, and be interpreted in a
manner that satisfies, the applicable requirements of Code Section 162(m) and
the 2000 Incentive Compensation Plan. The Committee's interpretation and
construction of any provision of the Award, including, but not limited to, the
determination of the performance goal, is final and conclusive and shall be
binding on all parties. If any provision of this Award would otherwise conflict
with the intent expressed in this Section, that provision to the extent possible
shall be interpreted so as to avoid such conflict. To the extent of any
remaining irreconcilable conflict with such intent, such provision shall be
deemed void as applicable to the Participant.

         5. Negative Discretion. The Committee shall have discretion to limit
the amount of Company Stock payable to the Participant under this Agreement to
the extent that it determines in its absolute discretion.

         6. Nontransferability of Awards. This Award shall not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered.

         7. Interpretation. If any term or provision contained herein would to
any extent be invalid or unenforceable, such term or provision will be reformed
so that it is valid, and such invalidity or unenforceability will not affect any
other provision or part hereof. The Award and all other actions taken hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Delaware without regard to the conflict of law principles thereof.

                  IN WITNESS WHEREOF, Stanley Furniture has caused this Award to
be executed and the Participant has affixed his signature hereto.

                         STANLEY FURNITURE COMPANY, INC.



                                            By:  /s/ Albert L. Prillaman
                                                 -----------------------
                                                     Albert L. Prillaman
                                                     Chairman

                                                /s/ Jeffrey R. Scheffer
                                                ------------------------
                                                     Participant


<PAGE>


                                   EXHIBIT A

                          2005 Incentive Award Details


Performance Criteria means earnings per share before nonrecurring items of
restructuring and unusual charges.

Performance Goal means the following:

         If earnings per share before nonrecurring items of restructuring and
unusual charges for 2005 are at least [intentionally omitted], the Participant
will receive 3,000 shares of Company Stock, subject to Section 5 of the Award.