LADD FURNITURE, INC.

                         1997 MANAGEMENT INCENTIVE PLAN

                                 PLAN HIGHLIGHTS

1.      Incentive payments based on financial performance and individual
        performance as follows:
                  For Corporate Participants
                           o  achievement of PAT target
                           o achievement of ROAE target (selected management)
                           o achievement of individual objectives
                  For      Operating Group and Company Participants o
                           achievement of PBT targets o achievement of ROIC
                           targets (presidents only) o achievement of individual
                           objectives
2.      No incentive payments will be made to any individual if the operating
        unit to which the individual is assigned does not achieve minimum PBT or
        PAT targets. Incentive payment expense will be accrued in results before
        calculation of profit.

3.      Total of 142 officers and key managers to participate in the plan
        (Exhibit I). Maximum incentives range from 10% to 100% of January 1,
        1997 base salary. Incentive payments are based on achieving performance
        criteria established by senior management.

4.      Program includes $50,000 discretionary incentive pool for extraordinary
        performance by LADD employees not covered by the Management Incentive
        Plan.

5.      Estimated incentive payout at planned performance levels is $2.9 
        million.

6.      Incentives earned in 1997 will be paid in cash after completion of
        annual audit (not later than March 31, 1998).

7.      In the event of a transfer of a participant during the fiscal year to an
        operating unit other than the unit in which originally a Plan
        participant, an appropriate adjustment will be made in Incentive Plan
        eligibility pro-rata for the time worked in each unit.

8.      In the event of a promotion of a participant within the same operating
        unit, an appropriate adjustment will be made in Incentive Plan
        eligibility pro-rata. In the event of a demotion which would place
        participants in a position substantially different from that in which
        they were nominated as a participant, an appropriate adjustment may be
        made as to the amount of incentive payment for which they are eligible
        as determined by the Compensation Committee of the Board of Directors.

9.      Participants will forfeit all income from plan if employment is
        terminated prior to January 1, 1998 for any reason other than death,
        disability or retirement (over age 55).

10.     The 1997 Management Incentive Plan only applies to fiscal year 1997.