<PAGE>
                                                                   Exhibit 10(d)


                            EXTENSION AND RENEWAL OF

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, as of this 26th day of April, 2000 by and between DMI
FURNITURE, INC., a Delaware corporation ("DMI" or the "Corporation") and DONALD
D. DREHER ("Employee").

         WHEREAS, Employee and DMI have entered into an Employment Agreement
dated as of September 1, 1986, which has been amended from time to time and
extended and renewed for additional terms through August 31, 2002;

         WHEREAS, the Employment Agreement, as amended, extended and renewed to
date, is intended to complement the terms of the Amendment to Employment
Agreement and Officer Severance Agreement dated as of May 19, 1988 between the
Employee and DMI (the "Officer Severance Agreement"), which provides for the
payment of certain benefits to Employee in certain circumstances following a
"change in control" of DMI (as defined in the Officer Severance Agreement).

         WHEREAS, Employee and DMI desire to amend, renew and extend the
Employment Agreement between them for an additional term expiring on August 31,
2004; and

         NOW, THEREFORE, intending to be legally bound hereby and in
consideration of the mutual undertakings hereinafter set forth, DMI and Employee
agree as follows, effective March 1, 2002;

         1. EMPLOYMENT. DMI or its successors hereby employs Employee and
Employee hereby accepts employment as Chairman of the Board, President, and
Chief Executive Officer of DMI for a period commencing March 1, 2002 and ending
August 31, 2004.

         2. DUTIES OF EMPLOYEE. Employee further agrees as follows:

                  (a) To perform well and faithfully all such duties as are
assigned to him by the Board of Directors of DMI; and

                  (b) To devote the time and attention to the performance of all
matters necessary and appropriate to the discharge of the duties so assigned to
him in the operation of DMI, it being the intention of this provision to require
that Employee serve as a "full-time" employee of DMI, to devote his best efforts
to the performance of the duties of him; and

                  (c) To refrain from investment or other involvement in any
business or other activity that competes with the business of DMI other than
nominal investments as a passive investor in publicly traded companies.

         3. COMPENSATION. As compensation for his services pursuant to this
Agreement, Employee shall be paid as follows:

                  (a) SALARY. A minimum salary of $295,000 per year payable at
the rate of $12,291.66 semi-monthly during the term of this Agreement. The
Compensation Committee of the Corporation's Board of Directors will periodically
review increases in the cost of living and may negotiate upward revisions to
salary with the Employee.

                  (b) CASH BONUS, FISCAL 2002, 2003 AND 2004. For the
Corporation's fiscal years 2002, 2003 and 2004, Employee shall receive an
incentive bonus based on the "adjusted net pre-tax income" for said fiscal
years. Cash bonus for fiscal year 2002 will be a percentage of the "adjusted net
pre-tax income' as set forth in table "A" below. Cash bonus for fiscal year 2003
will be a percentage of the "adjusted net pre-tax income" as set forth in table
"B" below. Cash bonus for the fiscal year 2004 will be a percentage of the
"adjusted net pre-tax income" so set forth in table "C" below. For the purpose
of this subsection, "adjusted net pre-tax income" shall mean the pre-tax income
as reported to the Securities and Exchange Commission on Form 10-K excluding (i)
any gains or losses


                                      E-1
<PAGE>

                  (c) resulting from the sale, conversion or other disposition
of capital assets; (ii) accruals made in accordance with general accepted
accounting principles to recognize the costs associated with the permanent
closure of an operation and the carrying costs prior to the sale of the assets
of that operation; (iii) gain or loss resulting from non-operational litigation;
and (iv) charges or credits resulting from the adoption of a change in
accounting principle. The maximum cash incentive bonus for each fiscal year
2002, 2003 and 2004 is not to exceed 20% of $5,500,000 "adjusted net pre-tax
income" or $1,100,000.

                                    TABLE "A"
                                   FISCAL 2002
<TABLE>
<CAPTION>
                                                            INCENTIVE BONUS AS A % OF
                   ADJUSTED NET PRE-TAX INCOME             ADJUSTED NET PRE-TAX INCOME
              ----------------------------------------------------------------------------
              <S>                                          <C>
              $        0 - $  902,999                                   0%
              $  903,000 - $1,354,999                                  10%
              $1,355,000 - $1,805,999                                  11%
              $1,806,000 - $2,257,999                                  12%
              $2,258,000 - $2,709,999                                  13%
              $2,710,000 - $3,160,999                                  14%
              $3,161,000 - $3,612,999                                  15%
              $3,613,000 - $4,064,999                                  16%
              $4,065,000 - $4,515,999                                  17%
              $4,516,000 - $4,967,999                                  18%
              $4,968,000 - $5,418,999                                  19%
              $5,419,000 - $5,500,000                                  20%
</TABLE>


                                    TABLE "B"
                                   FISCAL 2003
<TABLE>
<CAPTION>
                                                            INCENTIVE BONUS AS A % OF
                   ADJUSTED NET PRE-TAX INCOME             ADJUSTED NET PRE-TAX INCOME
              ---------------------------------------------------------------------------
              <S>                                          <C>
              $        0 - $  951,499                                  0%
              $  951,500 - $1,354,999                                 10%
              $1,355,000 - $1,805,999                                 11%
              $1,806,000 - $2,257,999                                 12%
              $2,258,000 - $2,709,999                                 13%
              $2,710,000 - $3,160,999                                 14%
              $3,161,000 - $3,612,999                                 15%
              $3,613,000 - $4,064,999                                 16%
              $4,065,000 - $4,515,999                                 17%
              $4,516,000 - $4,967,999                                 18%
              $4,968,000 - $5,418,999                                 19%
              $5,419,000 - $5,500,000                                 20%
</TABLE>




                                      E-2
<PAGE>

                                       E-2
                                    TABLE "C"
                                   FISCAL 2004
<TABLE>
<CAPTION>
                                                            INCENTIVE BONUS AS A % OF
                   ADJUSTED NET PRE-TAX INCOME             ADJUSTED NET PRE-TAX INCOME
              ---------------------------------------------------------------------------
              <S>                                          <C>
              $        0 - $  999,999                                    0%
              $1,000,000 - $1,354,999                                   10%
              $1,355,000 - $1,805,999                                   11%
              $1,806,000 - $2,257,999                                   12%
              $2,258,000 - $2,709,999                                   13%
              $2,710,000 - $3,160,999                                   14%
              $3,161,000 - $3,612,999                                   15%
              $3,613,000 - $4,064,999                                   16%
              $4,065,000 - $4,515,999                                   17%
              $4,516,000 - $4,967,999                                   18%
              $4,968,000 - $5,418,999                                   19%
              $5,419,000 - $5,500,000                                   20%
</TABLE>

                  (c) BONUS PAYMENTS. Any bonus under this paragraph 3 shall be
paid within one hundred thirty days of the end of the fiscal year.

                  For any fiscal year of DMI during which the period of
Employee's employment set forth in paragraph 1 (or any extension thereof)
expires before completion of the fiscal year, Employee shall receive a cash
bonus and a stock bonus equal to the bonuses that would have been due Employee
under paragraph 3(b) had Employee remained employed until the end of DMI's
fiscal year multiplied by a fraction, the numerator of which is the number of
complete calendar months during which Employee was employed during the fiscal
year and the denominator of which is 12.

         4. FRINGE BENEFITS. DMI will provide Employee with fringe benefits as
follows:

                  (a) DMI will maintain, without contribution by Employee, life
insurance with benefits payable as designated by Employee in a face amount equal
to three times Employee's annual base salary rate hereunder provided however the
face amount of life insurance benefits are not to exceed $750,000.

                  (b) DMI will maintain health insurance at least as
comprehensive as provided for other key and executive employees.

                  (c) DMI will maintain, without contribution by Employee,
travel accident insurance with benefits payable as designated by Employee in a
face amount equal to $250,000 death benefits for accidental death in the course
of travel.

                  (d) DMI will provide Employee with an automobile comparable to
those furnished to other key executives, or its cash equivalent of $675 per
month, for Employee's business related use.

                  (e) Employee shall receive reimbursement for expenses incurred
by him in connection with Medical Care for Employees, his spouse and his
dependents, provided, however, that the amount paid by DMI to Employee pursuant
to this subsection in any fiscal year during the term of this Agreement shall
not exceed $2,000. For the purpose of this subsection the term "Medical Care"
means amounts paid for the diagnosis, care, medication, treatment, or prevention
of disease, or for the purpose of affecting any structure or function of the
body (including amounts paid for accident or health insurance), or for
transportation primarily for and essential to Medical Care. Payments hereunder
may be made from time to time as requested by Employee with or without requiring
proof of the medical expenses in questions, in the discretion of the Board of
Directors, and it is not necessary that such medical expenses have already been
paid by Employee, his spouse, or his aforesaid dependents, but merely that, if
not yet paid, there exists an obligation to pay them. Premiums paid by DMI under
any group accident or health insurance policy that may be maintained by DMI
covering or for the benefit of some or all of its employees, and payments made
by insurers pursuant to said policy, shall not to any extent be regarded as
payments made pursuant to this subsection.



                                      E-3
<PAGE>

                  (f) Employee shall receive annual reimbursement for expenses
incurred by him in connection with personal or tax financial planning, not to
exceed $2,000 per year.

                  (g) Employee shall be entitled to participate in any benefit
plan of a type not specifically covered by this Agreement and established by DMI
for key employees during the term of Employee's employment hereunder on a basis
consistent with his age, position, responsibilities, and level of compensation.

                  (h) Employee shall be reimbursed for his reasonable
out-of-pocket travel and business expenses, including but not limited to,
membership in private clubs for business purposes. All such club memberships
will be approved by a majority of outside members of the Board of Directors.

                  (i) Employee shall designate a medical doctor as his choice
for annual physical examinations. DMI shall receive a doctor's report on each
annual examination. DMI shall bear the reasonable examination expense related
with these examinations.

         5. VACATION. Employee shall be entitled to a six-week vacation with pay
in each 12-month period ending August 31. A maximum of one week of annual paid
vacation shall be cumulative and will not be deemed waived if not taken during
the applicable 12-month period. Employee's paid vacation shall be pro-rated
based on the number of months he has remained employed by DMI during any fiscal
year during which this Agreement expires or is terminated.

         6. OTHER BOARD OF DIRECTORS ACTION. Nothing in this Agreement shall be
deemed to prevent the Board of Directors of DMI from taking any action it may
deem, in its sole discretion, to be desirable to make the terms and conditions
of this Employment Agreement more beneficial to Employee, or to add further
benefits to his employment with DMI, provided that Employee agrees to such
changes and additions.

         7. TERMINATION. This Agreement shall terminate and, except to the
extent previously accrued or as otherwise provided in the Officer Severance
Agreement, all rights and obligations of DMI and Employee under this Agreement
shall be void, upon the earliest to occur of any of the following:

                  (a) Expiration of the period of employment set forth in
paragraph 1, unless the period of employment is extended by the Board of
Directors, in which event termination shall occur upon the expiration of the
period of employment as extended by the Board of Directors;

                  (b)      Death of Employee;

                  (c) Mental or physical illness or disability of Employee that
shall incapacitate him, for a period of 90 successive days or for an aggregate
period of 120 days during any 12 calendar months, from fully performing the
duties assigned to him hereunder and in the good faith determination of the
Board of Directors and upon written notice to Employee.

                  (d) If Employee (i) is found guilty of having committed
against DMI any criminal act, including criminal fraud, or (ii) is found guilty
of having committed any criminal act involving moral turpitude, or (iii) the
willful and continued failure by the Employee to substantially perform the
Employee's duties with DMI after a written demand for substantial performance is
delivered to the Employee by the Board, which demand specifically identifies the
manner in which the Board believes that the Employee has not substantially
performed his duties; or (iv) the willful engaging by the Employee in gross
misconduct materially and demonstrably injurious to the Corporation. For the
purposes of this definition, no act, or failure to act on the Employee's part
shall be considered "willful" unless done or omitted to be done by the Employee
other than in good faith and without reasonable belief that the Employee's
action or omission was in the best interests of DMI. The Employee shall not be
deemed to have been terminated for Cause (as defined in the Officer Severance
Agreement) unless and until DMI has delivered a Notice of Termination, as
provided therein.

                  (e) Voluntary cessation by Employee of his duties and
responsibilities under this agreement.


                  If DMI terminates Employee's employment other than for Cause
(as defined in the Officer Severance Agreement), and a change in control (as
defined in the Officer Severance Agreement) occurs within 9 months thereafter,
then Employee shall be entitled to all benefits provided under the Officer
Severance Agreement.


                                      E-4
<PAGE>

                  Otherwise, if Employee's employment hereunder is terminated
for any other reason than those specified in subparagraphs (a) through (e) of
this paragraph 7, then DMI shall remain liable to Employee and shall pay
Employee in full settlement of DMI's obligations hereunder: (i) the full amount
of the balance of his base salary as provided in subparagraph 3(a) above, to the
expiration date of this Agreement or to such expiration date as may have been
extended by action of the Board of Directors pursuant to subparagraph 7(a), in a
lump sum; PLUS (ii) an amount equal to the cash bonus and the stock bonus that
would have been payable to Employee pursuant to subparagraphs 3(b), 3(c), or
3(d) above had Employee remained employed until the end of DMI's fiscal year,
multiplied by a fraction, the numerator of which is the number of complete
calendar months during which Employee was employed during the fiscal year and
the denominator of which is 12. The payments based upon the cash bonus and the
stock bonus shall be paid within 130 days of the delivery to DMI of the
financial statements upon which they shall be based.

         8. DIRECTORSHIP. Employee shall be nominated for election to the Board
of Directors of DMI at each annual meeting of DMI's stockholders. If duly
elected or appointed, Employee agrees to serve on the Board and shall be
designated as Chairman of the Board.

         9. COORDINATION WITH OFFICER SEVERANCE AGREEMENT. For the purposes of
the Officer Severance Agreement, this Agreement shall constitute a renewal and
extension of the Employment Agreement dated as of September 1, 1986 between
Employee and DMI. If any provision of this Agreement may be viewed as
conflicting with a provision of the Officer Severance Agreement, and the
provision at issue does not specifically state that it is intended to supersede
the Officer Severance Agreement, the office Severance Agreement shall control.

         10. NON-COMPETITION. If this Agreement is terminated for any reason
specified in subparagraphs (a) through (e) of Paragraph 7, Employee shall
refrain, for a period of one year after the termination of this Agreement, from
carrying on a business that competes with a business conducted by DMI within the
geographic areas described as follows:

                  The 50 states of the United States of America and Puerto Rico,
                  except for the states of Washington, Oregon, Idaho, Colorado,
                  Wyoming, North Dakota and South Dakota.

For the purposes of this paragraph, a business shall be deemed carried on by
Employee if carried on by a proprietorship, partnership, association, or
corporation, or other business entity with which Employee is connected, except
that Employee shall not be deemed to be connected with a business competitive to
that conducted by DMI to the extent that Employee is merely a passive investor
therein or not engaged in the business operations thereof as an officer,
director, employee, agent, consultant, sales representative, or other provider
of personal services in a capacity that would enable him to use his knowledge or
DMI's trade secrets, customer lists, sources of supply or unique business
methods to compete against DMI. It is agreed that in the event of a breach or a
threatened breach of the foregoing, no adequate remedy exists at law to protect
DMI's interests and that DMI shall be entitled to appropriate injunctive relief.
Should the foregoing covenant be adjudged to any extend invalid by any court of
competent jurisdiction, such covenant shall be deemed modified to the extend
necessary to make it enforceable.

         11. PLACE OF EMPLOYMENT. DMI agrees that the principal location at
which Employee is to render his services hereunder will continue to be
Louisville, Kentucky.



                                      E-5
<PAGE>
         12. NOTICES. Any notice to DMI or Employee hereunder may be given by
delivering it to, or by depositing it in the United States mail, postage
pre-paid, addressed to the parties at the following addresses:

                  DMI:
                  ---
                  Mr. Phillip Keller
                  DMI Furniture, Inc.
                  One Oxmoor Place
                  101 Bullitt Lane
                  Louisville, KY 40222

                  with a required copy to:
                  Chairman, Compensation / Stock Option Committee
                  DMI Furniture, Inc.
                  One Oxmoor Place
                  101 Bullitt Lane
                  Louisville, KY 40222

                  EMPLOYEE:
                  --------
                  Mr. Donald D. Dreher
                  8508 Westover Dr.
                  Louisville, KY 40059

         13. ENTIRE AGREEMENT. This Agreement and the Officer Severance
Agreement (a) contain the complete and entire understanding and agreement of DMI
and Employee respecting the subject matter hereof; (b) supersede and cancel all
understandings or agreements, oral or written, respecting the employment of
Employee in connection with the business of DMI; and (c) may not be modified
except by an instrument in writing executed by DMI and Employee.

         14. WAIVER OF BREACH. The waiver by either party, of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of either party.

         15. ASSIGNMENT. Employee may not assign his rights or obligations under
this agreement. The rights and obligations of DMI shall inure to the benefit of
and shall be binding upon the successors and assigns of DMI.

         16. CAPTIONS. All captions and headings used herein are for convenient
reference only and do not form part of this Agreement.

         IN WITNESS WHEREOF, DMI and Employee have caused this Agreement and its
renewal to be duly executed and delivered on the day and year first above
written, but effective March 1, 2002.
                                            DMI FURNITURE, INC.

ATTEST:                                     By
       -----------------------------           --------------------------------
                                               Phillip Keller
                                               Vice President, Finance,
                                               Chief Financial Officer


                                              ---------------------------------
                                              Donald D. Dreher



                                      E-6