Stanley Furniture Company (STLY)

Proposed Performance Criteria

If the amendment is approved, Performance Criteria would continue to mean any of the following areas of performance of the Company:

earnings before interest and taxes; cash flow; cost reduction (or limits on cost increases); debt to capitalization; debt to equity; earnings; earnings before interest, taxes, depreciation and amortization; earnings per share (including or excluding nonrecurring items); earnings per share before extraordinary items; income from operations (including or excluding nonrecurring items); income from operations to capital spending; free cash flow; net income (including or excluding nonrecurring items and/or extraordinary items); net sales; price per share of Company Stock; return on assets; return on capital employed; return on equity; return on investment; return on sales; sales volume; or total return to stockholders.

Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company. As determined by the Compensation Committee, any Performance Criteria will be calculated in accordance with the Company’s public financial statements, generally accepted accounting principles, or under a methodology established by the Compensation Committee prior to the issuance of a Performance Grant which is consistently applied. The Compensation Committee will have the power and complete discretion to determine the methodology for the calculation of Performance Criteria.