HAVERTY FURNITURE COMPANIES, INC.
780 Johnson Ferry Road
Suite 800
Atlanta, Georgia 30342

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 10, 2004

Dear Fellow Shareholder:

The Annual Meeting of the Shareholders of Haverty Furniture Companies, Inc., will be held at the Harbor Court Hotel, 550 Light Street, Baltimore, Maryland on Monday, May 10, 2004, at 10:00 a.m. for the following purposes:

Only shareholders of record at the close of business on March 8, 2004, are entitled to notice of, and to vote at, this meeting.

		By Order of the Board of Directors
		Jenny Hill Parker
		Vice President,
		Secretary and Treasurer

Atlanta, Georgia
April 8, 2004

WE URGE EACH SHAREHOLDER TO PROMPTLY
VOTE YOUR SHARES AT YOUR EARLIEST CONVENIENCE.
PLEASE FOLLOW THE DIRECTIONS ON YOUR PROXY CARD CAREFULLY.

PROXY STATEMENT
TABLE OF CONTENTS

HAVERTY FURNITURE COMPANIES, INC.
780 Johnson Ferry Road
Suite 800
Atlanta, Georgia 30342

Annual Meeting of Shareholders

PROXY STATEMENT

     Our Board of Directors is furnishing you this Proxy Statement to solicit proxies on its behalf at the 2004 Annual Meeting of Shareholders of Haverty Furniture Companies, Inc., (“we,” the “Company” or “Havertys”). The meeting will be held on May 10, 2004, at the Harbor Court Hotel, 550 Light Street, Baltimore, Maryland, beginning promptly at 10:00 a.m. local time. This Proxy Statement and the accompanying proxy are first being mailed to our shareholders on or about April 8, 2004.

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

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If you hold your shares in street name, whether you can vote by telephone or the Internet depends on the bank’s or broker’s voting processes. Please follow the directions on your proxy card carefully.

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MATTERS TO BE CONSIDERED AT ANNUAL MEETING
ELECTION OF DIRECTORS
(Items 1 and 2)

General

Twelve directors are to be elected at the annual meeting to hold office until the next annual meeting of shareholders and until their successors are elected and qualified. Our articles of incorporation provide that our Board of Directors be elected by shareholders of each of the two classes of stock, voting separately by class. At this annual meeting, three directors will be elected by the holders of Common Stock and nine will be elected by the holders of Class A Common Stock. It is intended that the accompanying proxy will be voted in favor of the nominees named below to serve as directors unless the shareholder indicates to the contrary on the proxy. The election of the Company’s directors requires a plurality of votes cast at the meeting by the holders of the respective classes of common stock. We expect that each of the nominees will be available for election, but if any of them is unable to serve at the time the election occurs, it is intended that such proxy will be voted for the election of another nominee to be designated by the Nominating and Corporate Governance Committee of the Board of Directors, and the Board of Directors.

The following sets forth for each nominee his or her age, a brief description of his or her principal occupation and business experience during the last five years, certain other directorships held and how long he or she has been a director of Havertys.

The Board of Directors unanimously recommends a vote FOR the election of all nominees for director.

Nominees for Election by Holders of Common Stock

L. Phillip Humann, 58, has been a director of the Company since 1992. Mr. Humann is Chairman of the Board, President and Chief Executive Officer of SunTrust Banks, Inc., a multi-bank holding company. From 1991 to 1998 he served as President of SunTrust Banks. Mr. Humann is also a director of Coca-Cola Enterprises Inc. and Equifax, Inc.

Terence F. McGuirk, 53, has been a director of the Company since June 2002. Mr. McGuirk is Vice Chairman, Turner Broadcasting System, Inc., a subsidiary of AOL Time Warner, a producer of news and entertainment products and provider of programming for the basic cable industry, and President and Chief Executive Officer, Turner Sports Teams, an owner and manager of the Atlanta baseball franchise, the Braves. Prior to April 2001, he was Chairman and Chief Executive Officer, TBS, Inc. Mr. McGuirk is also a director of Scientific-Atlanta, Inc. and The Sea Island Company. Mr. McGuirk is also a trustee of Piedmont Hospital Medical Center and The Westminster Schools.

Vicki R. Palmer, 50, has been a director of the Company since November 2001. Ms. Palmer is Executive Vice President, Financial Services and Administration, of Coca Cola Enterprises Inc., a bottler of soft drink products. From December 1999 to January 2004, she served as Corporate Senior Vice President, Treasurer and Special Assistant to the CEO. Prior to December 1999, she was Corporate Vice President and Treasurer of Coca-Cola Enterprises Inc. Ms. Palmer is also a director of First Tennessee National Corporation and is a trustee of Spelman College and Woodward Academy.

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Nominees for Election by Holders of Class A Common Stock

Clarence H. Ridley, 61, has been a director of the Company since 1979. Mr. Ridley is Chairman of the Board of Havertys. He served as the Company’s Vice Chairman from 1996 until his appointment as Chairman effective January 2001. From 1977 to 2000, Mr. Ridley was a Partner at the law firm of King & Spalding. Mr. Ridley is also a director of Carvel Holdings Corporation and Crawford & Company. Mr. Ridley is also trustee of STI Classic Funds and STI Classic Variable Trust.

John T. Glover, 57, has been a director of the Company since 1996. Mr. Glover is Managing Partner of J & SG Investments, LLP, a private investment concern. From March 2000 until February 2003, he was Vice Chairman of Post Properties, Inc., a real estate investment trust that develops and operates upscale multifamily apartment communities. From 1984 to 2000, he served as President of Post Properties, Inc. Mr. Glover is also a trustee of Emory University, and a director of Emory Healthcare, Inc. and Post Properties, Inc.

Ben M. Haverty, 43, was named a director in October 2003. Mr. Haverty is Regional Manager of the Georgia Operations of the Company.

Rawson Haverty, Jr., 47, has been a director of the Company since 1992. Mr. Haverty is Senior Vice President, Real Estate and Development of Havertys.

Mylle H. Mangum, 55, has been a director of the Company since May 1999. Ms. Mangum is Chief Executive Officer of True Services Holdings, LLC, a marketing services company and since October 2003, Chief Executive Officer of International Banking Technologies, a provider of retail banking consulting services. From May 1999 to June 2002, she was Chief Executive Officer of MMS Incentives, Inc., a private equity company concentrating on high-tech marketing solutions. From March 1997 to May 1999, Ms. Mangum served as Senior Vice President, Expense Management and Strategic Planning of Carlson Wagonlit Travel, a travel and hospitality company. Ms. Mangum is also a director of Barnes Group, Inc., Payless ShoeSource, Inc. and Scientific-Atlanta, Inc.

Frank S. McGaughey, III, 55, has been a director of the Company since 1995. Mr. McGaughey was named a Partner at the law firm of Powell, Goldstein, Frazer & Murphy in 1980.

Fred L. Schuermann, 58, has been a director of the Company since November 2001. Mr. Schuermann was President and Chief Executive Officer of Ladd Furniture, Inc., a furniture manufacturer, from 1996 until he retired in 2001. He was Chairman of Ladd Furniture, Inc. from 1998 until its acquisition by La-Z-Boy, Inc. in January 2000. Mr. Schuermann is also a director of Coveright Surfaces GmbH.

Clarence H. Smith, 53, has been a director of the Company since 1989. Mr. Smith is President and Chief Executive Officer of Havertys. He served as President and Chief Operating Officer from May 2002 until he assumed the position of Chief Executive Officer in January 2003. Mr. Smith was named Chief Operating Officer of Havertys in May 2000 and served as Senior Vice President, General Manager, Stores, from 1996 to 2000. Mr. Smith is also a director of Oxford Industries, Inc. and a trustee of Marist School.

Al Trujillo, 44, was named a director in October 2003. Mr. Trujillo is President and Chief Executive Officer of Recall Corporation, a global information management company and subsidiary of Brambles Industries, Ltd. located in Sydney, Australia. Prior to February 2002, he was President of Recall Americas, a division of Recall Corporation. Mr. Trujillo is an Advisory Board Member of the College of Engineering at Georgia Tech Institute of Technology.

Ben M. Haverty and Rawson Haverty, Jr. are brothers and are first cousins of Clarence H. Ridley and Clarence H. Smith, all of whom are directors of the Company. Clarence H. Ridley, Clarence H. Smith and Rawson Haverty, Jr. are first cousins and are officers of the Company.

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Information Regarding Beneficial Ownership of Directors and Management

The following table sets forth information regarding beneficial ownership of Common Stock and/or Class A Common Stock by each director, each individual in the Summary Compensation Table, and by our directors and executive officers as a group, all as of February 29, 2004.

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Section 16(a) Beneficial Ownership Reporting Compliance

The Securities Exchange Act of 1934 (the “1934 Act”) requires Havertys’ directors, certain officers and any persons who own more than 10% of Havertys’ Class A Common Stock or Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the NYSE. We believe, based on our review of the copies of the Forms 3, 4, and 5 and written representations from certain reporting persons, that no Forms 5 were required to be filed by those persons, and that all filing requirements under Section 16(a) were complied with during 2003, except for the following:

Information Regarding the Board and its Committees

Havertys’ business is managed under the direction and oversight of the Board of Directors. The Board appoints Havertys’ Chairman and Chief Executive Officer and its senior management team who are responsible for the day-to-day conduct of Havertys’ business. The Board’s primary responsibilities, thereafter, are to oversee management and to exercise its business judgment to act in good faith and in what each director reasonably believes to be in the best interests of Havertys. Both the Board of Directors and management believe that the long-term interests of shareholders are advanced by responsibly addressing the concerns of other stakeholders, including customers, vendors, employees and members of communities in which the Company operates.

Havertys has developed, and operated under, corporate governance principles and practices that are designed to maximize long-term shareholder value and promote the highest ethical conduct among Havertys’ directors and employees. A copy of the Board’s Governance Principles is available on our Web site at www.havertys.com.

The Board of Directors has an Executive Committee, an Audit Committee, an Executive Compensation and Employee Benefits Committee (the “Compensation Committee”), and a Nominating and Corporate Governance Committee.

Executive Committee

The Executive Committee exercises all the powers of the Board of Directors in the management of the current and ordinary business of the Company during the intervals between the meetings of the Board of Directors as conferred by Havertys’ By-Laws and as governed by law. The Executive Committee is composed of Clarence H. Ridley, Clarence H. Smith, L. Phillip Humann, Mylle H. Mangum and Frank S. McGaughey, III. The Executive Committee held one meeting during 2003.

Audit Committee

Under the terms of its charter, which is attached hereto as Appendix A, the Audit Committee represents and assists the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial

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statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company’s financial statements, the independent auditors’ qualifications and independence, the performance of the Company’s internal audit function and the performance of its independent auditors. In fulfilling its duties, the Audit Committee, among other things, shall:

The Audit Committee is composed of John T. Glover, Vicki R. Palmer and Fred L. Schuermann. Each member of the Audit Committee meets the independence requirements of the NYSE, the 1934 Act and the Company’s Corporate Governance Principles. Each member of our Audit Committee is financially literate, knowledgeable and qualified to review financial statements and the Board of Directors has determined that each member of the Audit Committee is an “audit committee financial expert” as defined under SEC regulations. The Audit Committee met seven times during 2003.

Compensation Committee

Under the terms of its charter, the Compensation Committee has overall responsibility for evaluating and approving the officer compensation plans, policies and programs of the Company. In fulfilling its duties, the Compensation Committee, among other things, shall:

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The Compensation Committee is composed of Mylle H. Mangum, Frank S. McGaughey, III, and Terence F. McGuirk. The Compensation Committee met three times during 2003. Each member of the Compensation Committee meets the independence requirements of the NYSE and the Company’s Corporate Governance Principles.

Nominating and Corporate Governance Committee

Under the terms of its charter, the Nominating and Corporate Governance Committee (the “Governance Committee”) is responsible for considering and making recommendations to the full Board concerning the composition, function and needs of the Board, and review and development of corporate governance guidelines. A copy of the Governance Committee’s charter is available on our Web site at www.havertys.com. In fulfilling its duties, the Governance Committee, among other things, shall:

The Governance Committee will consider recommendations for directorships submitted by shareholders who wish the Governance Committee to consider their recommendations for nominees for the position of director. Shareholders should submit their recommendations in writing to the Governance Committee in care of the Office of the Secretary, Haverty Furniture Companies, Inc., 780 Johnson Ferry Road, Suite 800, Atlanta, Georgia 30342. Recommendations by shareholders that are made in accordance with these procedures will receive the same consideration given to nominees of the Governance Committee.

In its assessment of each potential candidate, the Governance Committee will review the nominee’s experience, independence, understanding of the Company’s or other related industries and such other factors as the Governance Committee determines are pertinent in light of the current needs of the Board. Diversity of race, ethnicity, gender and age are factors considered in evaluating candidates for Board membership. The Governance Committee will also take into account the ability of a director to devote the time and effort necessary to fulfill his or her responsibilities.

Nominees may be suggested by directors, members of management, shareholders or, in some cases, by a third-party search firm. In identifying and considering candidates for nomination to the Board of Directors, the Governance Committee considers, in addition to the requirements set out in the Company’s Corporate Governance Principles and the Committee’s charter, quality of experience, the needs of the Company and the range of talent and experience represented on the Board.

The Governance Committee sometimes uses the services of a third-party executive search firm to assist it in identifying and evaluating possible nominees for director.

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Mr. Ben Haverty and Mr. Trujillo are the only nominees for director proposed to be elected for the first time at the Annual Meeting. Mr. Haverty’s name was suggested by the Company’s Chairman Emeritus, Rawson Haverty, Sr., who stepped down as a director in favor of Mr. Haverty. Mr. Trujillo’s name was first suggested by a third-party executive search firm.

The members of the Governance Committee are Frank S. McGaughey, III, Vicki R. Palmer and Fred L. Schuermann. Each member of the Governance Committee meets the independence requirements of the NYSE, the 1934 Act and the Company’s Corporate Governance Principles. The Governance Committee met twice during 2003.

Director Independence

The Board has reviewed all transactions or relationships between each director, or any member of his or her immediate family and Havertys, its senior management and its independent auditor.

Based on this review and as required by the independence standards of the NYSE, the Board has affirmatively determined that all non-employee directors are independent from management and its independent auditor within the meaning of the NYSE listing standards and the applicable SEC rules and regulations. In connection with the evaluation, the Board considered that L. Phillip Humann, a director, is Chairman, President and Chief Executive Officer of SunTrust Banks, Inc., a multi-bank holding company. The Company’s outstanding indebtedness to SunTrust Banks, Inc. at December 31, 2003, was $12.5 million; its greatest amount outstanding during 2003 was $24.5 million; and related interest payments during 2003 were noted as being significantly below the threshold for causing Mr. Humann to be considered not independent. The Board determined that Mr. Humann has no direct or indirect material relationship with Havertys.

Attendance and Compensation of Directors

In 2003, the Board held four meetings and Committees of the Board held a total of 13 meetings. Overall attendance at such meetings was 95%. Each Director attended more than 80% of the aggregate number of all meetings of the Board and Committees on which he or she served during 2003.

Retainer fees to directors are paid semi-annually each year on May 1 and November 1. Annual fees for employee directors are $3,000 and fees for non-employee directors are $30,000. The Directors’ Compensation Plan adopted by the Board of Directors and approved by shareholders in 1996, provides for the semi-annual portion of the annual retainer fee to be paid on May 1 each year in shares of the Company’s Common Stock valued at the closing price on that day. The remaining portion of the annual fee may be paid in cash or in shares of Common Stock, at the election of the director. In addition to the annual retainer, each non-employee director receives a fee of $1,250 for attendance at each Board meeting and each meeting of a Board committee on which such director serves.

Havertys maintains a Directors’ Deferred Compensation Plan that permits all directors who choose participation in the Plan to defer to a future date receipt of payment of retainer fees and/or meeting fees (meeting fees being applicable only to non-employee directors) which would otherwise be paid in cash or in shares of Common Stock for their services. Under the Plan, such deferred fees (to be accrued in a director’s account in the form of an equivalent number of shares of Common Stock and/or cash), plus accrued interest (at a rate determined annually by the Executive Committee in accordance with the Plan), shall be distributed in the future to a director in one lump sum or in no more than ten equal annual installments on the date or dates that had been pre-determined and elected by such director upon his initial election to participate in the Plan, or in accordance with the terms of the Plan. Four directors will participate in the Plan in 2004.

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Pursuant to an automatic grant provision under the Company’s 1998 Stock Option Plan, the Plan authorizes that each non-employee director be granted, on a pre-determined date annually, an option to purchase 6,000 shares of Common Stock at an exercise price equal to the market price of such stock on the date of grant. On October 31, 2003, options were granted to Havertys’ non-employee directors covering an aggregate of 48,000 shares of Common Stock at an exercise price per share of $20.75. These options were granted to John T. Glover, L. Phillip Humann, Mylle H. Mangum, Frank S. McGaughey, III, Terence F. McGuirk, Vicki R. Palmer, Fred L. Schuermann and Al Trujillo.

Communications with Directors

Shareholders and other interested parties who desire to contact one or more of Havertys’ non-management directors may send a letter to the following address:

Board of Directors
c/o Corporate Secretary
Haverty Furniture Companies, Inc.
780 Johnson Ferry Road
Suite 800
Atlanta, Georgia 30342

All such communications will be promptly forwarded to the appropriate director or directors specified in such communications.

Annual Meeting Policy

Havertys does not have a policy regarding director attendance at the Annual Meeting because directors are not expected to attend Havertys’ Annual Meeting of Shareholders. Historically, this meeting is held in Maryland, the state of the Company’s incorporation, and typically is a very brief meeting conducted by the Company’s Corporate Secretary. Generally, no shareholders are in attendance.

Code of Business Conduct and Ethics

All of our directors and employees, including our Chief Executive Officer and other senior executives, are required to comply with our Code of Business Conduct and Ethics (the “Code”) to help ensure that our business is conducted in accordance with the highest standards of ethical behavior. Havertys’ continued growth and profitability are linked to our ability to make decisions that are consistent with our traditional business values and ethical principles. The Code is published on our Web site at www.havertys.com.

Certain Transactions and Relationships

L. Phillip Humann, a director of the Company, is Chairman of the Board of Directors, President, and Chief Executive Officer of SunTrust Banks, Inc. (“SunTrust”). SunTrust provides commercial lending services to Havertys on terms comparable to other customers similarly situated. As of December 31, 2003, the Company’s indebtedness to SunTrust totaled $12.5 million, and the greatest amount outstanding during 2003 was $24.5 million. In the opinion of management, the terms of such credit transactions are fair and reasonable and as favorable to Havertys as those that could be obtained from other commercial banks.

Clarence H. Ridley, Chairman of the Company’s Board of Directors, is a Trustee of STI Classic Funds and STI Classic Variable Trust. These investment funds are advised by Trusco Capital Management, Inc., a subsidiary of SunTrust.

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EXECUTIVE COMPENSATION

Executive Compensation and Employee Benefits Committee Report on Executive Compensation

This report is furnished by Haverty’s Executive Compensation and Employee Benefits Committee of the Board of Directors (the “Compensation Committee”). We review, establish and approve changes to compensation policies and administer compensation plans for Havertys’ executive officers.

General Policies. Havertys’ compensation policies are designed to attract, retain and motivate highly qualified executives; to ensure that Havertys competes successfully for executive talent to accomplish its goals; to compensate executive officers for performance and to encourage significant ownership of Havertys Common Stock by our officers.

We set executive compensation based on an independent evaluation of the market competitiveness of Havertys’ officer compensation program conducted by a professional compensation consulting firm. We establish a total compensation package for each executive position based on similar positions in businesses with revenues comparable to those of Havertys, but subject to adjustment to reflect level of experience. The total compensation package is then broken into three components (base salary, annual incentive compensation and long-term compensation) as discussed below, with an emphasis on incentive compensation.

Base Salary. We establish a base salary range for each executive position, reflecting median base salaries for the comparative group. Surveys will be conducted at least biannually.

A base salary within the market range is set for each executive by considering the experience and individual performance of the executive. For 2003, base salaries for the named executive officers, except Mr. Smith, ranged from 0% to 2.6% higher than the prior year’s salaries. Mr. Smith’s base salary increased 25% in connection with his becoming Havertys’ Chief Executive Officer on January 1, 2003. For compensation purposes, we evaluate Messrs. Ridley’s and Smith’s performance on an annual basis. Messrs. Ridley and Smith evaluate the other named executive officers, and we use those evaluations in establishing base salaries.

Incentive Compensation. An executive of Havertys will earn total compensation that is competitive with the market only if Havertys achieves corporate financial performance goals and incentive compensation is paid. If goals are exceeded, incentive compensation can cause total compensation to exceed median market levels.

The incentive components of compensation are intended to encourage achievement of both short-term and long-term financial and operational objectives. We have placed and will continue to place an increasing emphasis on compensation tied to the meeting of objectives, which are aligned with those of the shareholders.

Bonuses. The annual bonuses available to Havertys’ market area and regional managers and corporate executives were based upon quantitative measures of the Company’s financial performance as measured by profits before bonuses, LIFO provision and income taxes (“corporate profits”). Market area and regional manager bonuses are based on a pre-set formula related to annual corporate profits produced in such area or region. Bonus amounts for executive officers, department heads and other key persons are based on Havertys’ corporate profits and assessment of individual contribution. The Compensation Committee determines these bonuses subjectively.

In 2003, corporate profits decreased 3.9% from the prior year, and income before the accounting change decreased 0.1%. Diluted earnings per share before the accounting change decreased 1.8% to $1.08. Total bonuses earned for 2003 by 93 individuals amounted to $4,520,000, a decrease of $425,000, or 8.6%, as

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compared to the 2002 bonuses. Of this amount, 5.4% was earned by Mr. Ridley, 5.9% by Mr. Smith and 12.4% by the other named executive officers.

For 2003, 39.5% of Mr. Ridley’s and 41.4% of Mr. Smith’s total compensation (excluding the value of stock option grants, fees for Board service and contributions to the Company’s 401(k) Plan) consisted of incentive payments. The portion of the other named executive officers’ total compensation attributable to incentive award payments ranged from 41.8% to 45.1% of total compensation.

Equity Incentives. The Company’s 1998 Stock Option Plan is currently the basis of Havertys’ long-term incentive plan for executives and key employees. During 2003, option awards under this Plan were made to 139 of Havertys’ employees, covering an aggregate of 463,000 shares of Common Stock. All options were granted at an exercise price equal to the market value of Havertys’ Common Stock on the date of grant and generally have a term of seven years. The options become exercisable beginning approximately one year from the date of grant with annual vesting schedules based on the number of shares per individual grant. Grants of 10,000 or more shares vest ratably over four years. Vesting is accelerated for optionees reaching age 65, such that any remaining options become fully vested.

The Compensation Committee, based on input from its outside consultants, presented to the Board and with their approval to the shareholders at this Annual Meeting, the 2004 Long-Term Incentive Plan, which will provide greater flexibility in developing total compensation packages for Havertys’ executives and key employees.

Section 162(m). In making our decisions about compensation for Messrs. Ridley and Smith and other officers likely to be named executive officers, we consider Section 162(m) of the Internal Revenue Code, which limits to $1 million per year the compensation expense deduction Havertys may take for compensation paid to a person who is “highly compensated” for purposes of the Internal Revenue Code, unless the compensation is “performance-based.” It is generally the policy of Havertys that the components of executive compensation that are inherently performance-based should qualify for exclusion from the deduction limitation under Section 162(m). We believe that annual bonuses and stock options currently qualify as performance-based.

We also believe, however, that while tax deductibility is an important factor, it is not the sole factor to be considered in setting executive compensation policy, and therefore reserve the right, in appropriate circumstances, to pay amounts in addition to base salary that might not be deductible. The Compensation Committee’s purpose in doing so is to ensure that Havertys retains its best executives and remains competitive in the market for executive talent.

If non-performance-based compensation in excess of $1 million should become payable to a person who is “highly compensated” for this purpose, we may consider requiring deferral of receipt of any amounts earned in excess of the cap to a tax year following the year in which the individual leaves the employment of Havertys.

Approval of Incentive Plans. All of our recommendations with respect to compensation attributable to 2003 for the named executive officers were reported to and ratified by the Board of Directors. In accordance with Havertys’ past practice under Section 16 of the Securities Exchange Act of 1934 and Section 162(m), we continue to make decisions regarding the grant of stock options and other awards and our decisions are reported to and ratified by the Board.

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Executive Officers

Executive officers are elected annually by the Board. The following table sets forth the names of certain executive officers and the principal positions and offices they hold with Havertys. Unless otherwise indicated, each of these officers has served as an executive officer of Havertys for at least five years.

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Information Regarding Executive Officer Compensation

The following tables and footnotes discuss the compensation paid or accrued for the last three years to (i) our Chief Executive Officer and (ii) our four other most highly compensated executive officers (the “named executive officers”).

Summary Compensation Table

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Compensation Pursuant to Stock Options

The following table provides information on option grants during the year ended December 31, 2003, to the named executive officers:

Option Grants in Last Fiscal Year

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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option Values

The following table summarizes stock options exercised by the Chief Executive Officer and by the named executive officers during 2003 and the total value of unexercised options held by each listed individual as of December 31, 2003:

Retirement Plan

The Company maintains a tax-qualified, non-contributory defined benefit retirement plan (the “Retirement Plan”). All employees of the Company are eligible to participate upon completion of one year of service and reaching age 21. Officers are eligible to participate in the Retirement Plan, but directors are not eligible unless they are also full-time employees. Annual contributions to the Retirement Plan are made in amounts determined by the Retirement Plan’s actuaries to be sufficient to fund the benefits to be paid and to meet regulatory requirements.

The Retirement Plan provides for the payment of fixed monthly benefits upon an employee’s normal retirement at age 65. Benefits may also be paid upon early retirement as provided in the Retirement Plan. Benefits upon retirement are based upon years of service (up to a maximum of 40 years for calculating such benefits) and final average earnings. “Final average earnings” means the average annual earnings for the five consecutive years in which a participant had the highest earnings during the last ten years of employment. Compensation for purposes of computing annual benefits under the Retirement Plan includes basic salary, wages, overtime pay, bonuses, commissions, amounts contributed to the 401(k) plan by the employee and other direct compensation included in the IRS Form W-2.

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The table below illustrates the estimated annual benefits payable upon retirement under the Retirement Plan to persons in specified years of service and compensation categories. The benefits shown are straight-life annuities and are based upon an assumed retirement during 2003. The compensation amounts shown are compensation in the final year of employment. For purposes of determining final average earnings, a 5% per year increase in earnings was used for prior years.

Supplemental Executive Retirement Plan

On November 3, 1995, the Board of Directors adopted a non-qualified Supplemental Executive Retirement Plan (the “Plan”), effective January 1, 1996, for the benefit of those employees whose retirement benefits would otherwise be reduced by the limitation imposed by federal pension law and I.R.S. regulations on the amount of compensation that may be taken into account in computing benefits under a defined benefit retirement plan. Federal pension law and I.R.S. regulations currently prohibit providing benefits on annual compensation above $200,000 for 2002 and 2003. Under the provisions of the 1996 Supplemental Plan, participation in the Plan will be automatic for any employee who has pay that cannot be included in computing benefits under the Company’s Retirement Plan because it exceeds the I.R.S. limit; however, the total amount of annual retirement benefits that may be paid to an eligible participant in the Plan from all sources (Retirement Plan, Social Security and the 1996 Supplemental Plan) may not exceed $125,000. [See “Retirement Plan” above for information on the amount of benefits that the Named Executive Officers are eligible to receive upon retirement.]

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Mutual Fund Option Plan

On January 15, 1999, the Board of Directors adopted the Havertys Top Hat Mutual Fund Option Plan (“the Plan”). The Plan covers certain executives and employees as designated by the Executive Committee of the Board of Directors. The Plan is designed to accumulate retirement funds for selected employees, including the executive officers. The Plan allows participants to defer up to 100% of their bonus compensation in exchange for an option to buy selected mutual funds at a discount equal to the bonus he or she would have otherwise received. The Plan required participants to defer 100% of their 1998 awarded bonus compensation and subsequent bonuses are deferrable, all or in part, by advance election by covered employees. The Plan is administered by the Company.

Agreements with Executives Regarding Change in Control

On February 7, 1997, and February 23, 2001, the Board of Directors approved agreements (each an “Agreement”) between the Company and certain executive officers of the Company, including each of the named executive officers. These Agreements provide for certain cash payments and continuation of benefits in the event of a Change in Control or Potential Change in Control of the Company, as defined in the Agreements. Generally, a “Change in Control” shall be deemed to have occurred if (i) any person becomes a beneficial owner of 20% or more of the combined voting power of the Company’s outstanding securities (other than Rawson Haverty, Mrs. Betty Haverty Smith, Clarence H. Ridley, John Rhodes Haverty, M.D., and Frank S. McGaughey, Jr., and their spouses, lineal descendants, heirs, administrators or representatives), or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director approved by two-thirds of the directors then in office cease for any reason to constitute a majority of the Board of Directors, or (iii) the shareholders of the Company approve a merger or statutory share exchange with any other corporation (other than a transaction which results in the Company’s outstanding voting securities prior thereto continuing to represent at least 75% of the combined voting power of the Company’s outstanding securities, or a transaction in which no person acquires more than 50% of the combined voting power of the Company’s outstanding securities), or (iv) the shareholders of the Company approve a plan of complete liquidation or an agreement for the sale or disposition of all or substantially all of the Company’s assets.

Messrs. Clarence H. Ridley, Clarence H. Smith, Dennis L. Fink and M. Tony Wilkerson have each entered into an agreement providing that: upon termination of the executive’s employment following a Change in Control and during the term of the Agreement, unless termination is for cause, by reason of death, disability or retirement, or by the executive without “Good Reason” as defined in the Agreement, or if termination occurs prior to a Change in Control but following a Potential Change in Control in which the Company has entered into an agreement, the consummation of which will constitute a Change in Control, the Company will:

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In addition, following a Change in Control and during the term of the Agreement, during any period that the executive fails to perform full-time duties as a result of incapacity due to physical or mental illness, the Company will pay the executive’s full salary together with all compensation and benefits payable to the executive until the executive’s employment is terminated by the Company for disability. If the executive’s employment is terminated for any reason following a Change in Control and during the term of the Agreement, the Company will pay the executive’s full salary through the date of termination together with all compensation and benefits payable through the date of termination, and will pay the executive’s normal post-termination compensation and benefits as such payments become due in accordance with the Company’s retirement, insurance and other compensation or benefit plans or programs.

The Company may reduce payments under any Agreement in accordance with provisions of the Agreement in order to insure that the total payments to an executive will be deductible pursuant to Section 280G of the Internal Revenue Code of 1986, as amended. The term of each Agreement is for a period of one year commencing on January 1 and will renew automatically each January 1 thereafter for a period of one year unless earlier terminated under the Agreement or in the event a Change of Control occurs prior to such January 1. If a Change in Control occurs during the term of the Agreement, the Agreement will continue in effect for a period of not less than 36 months beyond the month in which the Change in Control occurred.

Rawson Haverty, Jr., has also entered into an Agreement with the Company on identical terms and conditions described above, except that the severance payments with respect to annual base salary and bonus shall be with respect to one year’s base salary and one year’s annual bonus (or the average of the annual salary and the annual bonus over the previous three years, whichever is higher) as opposed to twice such amounts, and post-termination insurance benefits shall be provided for 12 months after termination as opposed to 24 months.

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AUDIT COMMITTEE MATTERS

Audit Committee Membership

All current members of the Audit Committee are independent as defined in both the New York Stock Exchange listing standards and the Securities and Exchange Commission standards applicable to audit committee members. The Board of Directors has determined that all current members of the Audit Committee are audit committee financial experts as defined in the rules of the Securities and Exchange Commission.

Audit Committee Report

The Audit Committee reviews the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls and disclosure controls. In this context, we have met and held discussions with management and the independent auditors. Management represented to us that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and we have reviewed and discussed the audited financial statements and related disclosures with management and the independent auditors, including a review of the significant management judgments underlying the financial statements and disclosures.

The independent auditors report to us and to the Board. We have sole authority to appoint and to terminate the engagement of the independent auditors.

We have discussed with the independent auditors matters required to be discussed by Statement on Auditing Standards No. 61 (Communication With Audit Committees), including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. In addition, we have received the written disclosures and the letter from the independent auditors required by the Independence Standards Board Standard No. 1 (Independence Discussions With Audit Committees) and have discussed with the independent auditors the auditors’ independence from the Company and its management. In concluding that the auditors are independent, we determined, among other things, that the non-audit services provided by Ernst & Young LLP (as described below) were compatible with their independence. Consistent with the requirements of the Sarbanes-Oxley Act of 2002, we have adopted additional policies to ensure the independence of the independent auditors, such as prior committee approval of non-audit services and required audit partner rotation.

We discussed with the Company’s internal and independent auditors the overall scope and plans for their respective audits. We periodically meet with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. We also periodically meet in executive session.

In reliance on the reviews and discussions referred to above, we recommended to the Board (and the Board subsequently approved the recommendation) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, for filing with the Securities and Exchange Commission.

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Services Performed by the Independent Auditor

The Audit Committee pre-approves all audit and non-audit services performed by the independent auditor in order to ensure that the provision of such services does not impair the auditor’s independence. The Committee’s policy and procedures are as follows:

For each engagement, management provides the Committee with information about the services and fees sufficiently detailed to allow the Committee to make an informed judgment about the nature and scope of the services and the potential for the services to impair the independence of the auditor.

After the end of the audit year, management provides the Committee with a summary of the actual fees incurred for the completed audit year.

Ernst & Young LLP served as the independent auditor for the Company during the year ended December 31, 2003. Although the Audit Committee has not yet selected an independent auditor for Havertys for the fiscal year ended December 31, 2004, it is expected that Ernst & Young LLP will be chosen. No representative of Ernst & Young LLP will be present at the annual meeting.

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Independent Auditor Fees

The following table shows the fees incurred for services rendered by Ernst & Young LLP, the Company’s independent auditor, in 2003 and 2002. All such services were pre-approved by the Committee in accordance with the pre-approval policy.

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SHAREHOLDER RETURN PERFORMANCE GRAPH

Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on the Company’s Common Stock and Class A Common Stock against the cumulative total return of the NYSE/AMEX/Nasdaq Home Furnishings & Equipment Stores Index and the S&P Smallcap 600 Index for the period of five years commencing December 31, 1998, and ending December 31, 2003.

The graph below assumes that the value of the investment in the Company’s Common Stock or Class A Common Stock and each index was $100 on December 31, 1998, and that all dividends were reinvested.

COMPARISON OF FIVE-YEAR TOTAL RETURN AMONG
HAVERTY FURNITURE COMPANIES, INC.,
NYSE/AMEX/NASDAQ HOME FURNISHINGS & EQUIPMENT STORES AND
THE S&P SMALLCAP 600 INDICES

NOTE: Data complete through last fiscal year.

NOTE: Corporate Performance Graph with peer group uses peer group only performance (excludes only company).

NOTE: Peer group indices use beginning of period market capitalization weighting.

NOTE: S&P index returns are calculated by Zacks.

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The Company is also presenting a ten-year performance graph in this proxy statement as an alternative benchmark to give a longer-term perspective.

Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on the Company’s Common Stock and Class A Common Stock against the cumulative total return of the NYSE/AMEX/Nasdaq Home Furnishings & Equipment Stores Index and the S&P 600 Smallcap Index for the period of ten years commencing December 31, 1993, and ending December 31, 2003.

The graph below assumes that the value of the investment in the Company’s Common Stock or Class A Common Stock and each index was $100 on December 31, 1993, and that all dividends were reinvested.

COMPARISON OF TEN-YEAR TOTAL RETURN AMONG
HAVERTY FURNITURE COMPANIES, INC.,
NYSE/AMEX/NASDAQ HOME FURNISHINGS & EQUIPMENT STORES AND
THE S&P SMALLCAP 600 INDICES

NOTE: Data complete through last fiscal year.

NOTE: Corporate Performance Graph with peer group uses peer group only performance (excludes only company).

NOTE: Peer group indices use beginning of period market capitalization weighting.

NOTE: S&P index returns are calculated by Zacks.

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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS

The following information is provided with respect to all persons known to the Company to be the beneficial owners of more than five percent of the Company’s Common Stock and/or Class A Common Stock as of February 29, 2004. Unless otherwise indicated, the person or entity shown possesses sole voting and investment powers with respect to the amounts shown.

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APPROVAL OF 2004 LONG-TERM INCENTIVE PLAN
(Item 3)

The Company believes equity compensation aligns the interests of employees and non-employee Directors (“Non-Employee Directors”) with the interests of its other shareholders. The Company currently provides for the award of stock options to key employees and Non-Employee Directors through the Company’s 1998 Stock Option Plan (the “1998 Plan”). Other forms of equity compensation cannot be granted under the 1998 Plan. The Company believes that the expansion of its equity compensation program is essential in attracting, retaining and motivating employees, consultants, advisors and Non-Employee Directors. The 2004 Long-Term Incentive Plan (the “2004 Plan”) will allow for such expanded use of equity compensation.

The 2004 Plan is intended to accomplish five major objectives:

(i) attracting and retaining officers, employees, and non-employee directors of the Company and its Subsidiaries;

(ii) motivating such individuals by means of performance-related incentives to achieve long-range performance goals and increased shareholder value;

(iii) enabling such individuals to participate in the long-term growth and financial success of the Company;

(iv) encouraging ownership of stock in the Company by such individuals; and

(v) linking compensation to the long-term interests of shareholders.

Key employees may include not only the named executive officers of the Company but also may include other officers or employees of the Company or any of its subsidiaries who in the judgment of the Committee contribute significantly to the success and growth of the Company.

The 2004 Plan is an omnibus long-term incentive plan with 1,100,000 shares of the Company’s $1.00 par value Common Stock to be reserved, with an annual “run rate” cap of 1.5% of Common Stock outstanding. As of March 1, 2004, the market value of the Company’s Common Stock was $22.08 per share. The 2004 Plan will provide sufficient shares to fund grants for at least three years and will provide multiple award vehicles in addition traditional option grants: deferred shares or units, performance contingent restricted stock or units, stock appreciation rights, and time-based restricted stock. The Plan provides the ability to have a strong pay and performance linkage such that at least a portion of future long-term incentive awards for executives may be tied to performance-contingent vesting and/or performance-accelerated vesting with long “cliff” vesting.

The Committee and the Board are committed to long-term employee stock ownership, and the Chief Executive Officer and the other named executive officers have significant equity ownership. The time-based restricted Stock Awards provided for in the 2004 Plan further emphasizes long-term equity ownership. The Committee will continue to monitor ownership levels and may consider ownership guidelines or mandatory-holding periods in the future if deemed necessary.

Under the Company’s 1998 Plan, approximately 511,000 stock options were awarded to employees and Non-Employee Directors in 2003. Under the 2004 Plan, however, the Compensation Committee (the “Committee”) presently intends to award restricted shares (which may be performance-based restricted shares) to key employees beginning in 2004 in lower amounts than the amounts of stock options previously awarded. Stock options will continue to be awarded in 2004. Some of these options will be granted under the 1998 Plan and others will be granted under the 2004 Plan.

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The Board of Directors adopted the 2004 Plan, subject to approval of the Company’s shareholders. The Board of Directors believes that it is desirable to change the Company’s equity compensation program and recommends that shareholders vote FOR approval of the 2004 Plan. The 2004 Plan will become effective upon approval by the Company’s shareholders.

The following is a brief summary of the material provisions of the 2004 Plan, which summary is qualified in its entirety by reference to the copy of the 2004 Plan, attached to this Proxy Statement as Appendix B.

General Information

The 2004 Plan provides for equity compensation awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units, deferred shares and deferred stock units, dividend equivalent rights, and performance awards (collectively, “Awards”) to eligible employees, Non-Employee Directors, consultants or advisors to the Company or a subsidiary thereof. As of February 29, 2004, there are 8 Non-Employee Directors, 14 principal corporate officers and approximately 4,100 employees other than principal corporate officers who are eligible to receive Awards under the 2004 Plan.

Common Shares Available under the 2004 Plan

The 2004 Plan authorizes 1.1 million common shares for grants of Awards, of which no more than 500,000 shares may be actually issued or transferred upon the exercise of Incentive Stock Options. The common shares offered under the 2004 Plan may be authorized but unissued shares, treasury shares or any combination thereof. To the extent that any Award based on common shares expires or terminates without having been exercised in full, is forfeited or is settled in cash, the common shares subject to that Award will be available for other Awards. Also, to the extent that an option is exercised by tendering common shares as payment of the exercise price and/or required tax withholding, the maximum number of shares available under the 2004 Plan will be increased by the number of shares so tendered.

The 2004 Plan provides that the maximum number of common shares with respect to which options, stock appreciation rights or performance-based awards may be granted to any single participant in any calendar year may not exceed 100,000. The amount that any single participant may receive in any calendar year for performance units settled in cash may not exceed $1,000,000.

Fair market value under the 2004 Plan is generally equal to the closing sales price at which common shares of the Company were traded on the New York Stock Exchange on the relevant date (or if there were no reported sales on that date, on the most recent date on which sales were reported). As of March 1, 2004, the fair market value of a common share of the Company was $22.08.

Plan Administration

The 2004 Plan will be administered by the Committee, which will consist solely of not less than three Non-Employee Directors, all of whom shall (i) satisfy the requirements of Rule 16b-3(b)(3) of the Exchange Act; (ii) be “outside directors” within the meaning of Section 162(m); and (iii) otherwise meet any “independence” requirements promulgated by any stock exchange on which the shares are listed. The members of the Committee shall be appointed by and serve at the pleasure of the Board. Furthermore, the Board retains the right to make Awards under the 2004 Plan.

The Committee has the authority, among other things, to select the individuals, to whom, and the time or times at which, Awards will be granted, the type of Awards to be granted, the number of common shares to be subject to each grant, the terms and conditions of each Award, and the duration of leaves of absence which may be granted to participants without constituting a termination of their employment for purposes of the 2004 Plan.

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The Committee cannot make any adjustment (other than in connection with a stock dividend, recapitalization or other transaction where an adjustment is permitted or required under the terms of the 2004 Plan) or amendment where the adjustment or amendment would reduce or have the effect of reducing the exercise price of an option previously granted under the 2004 Plan, whether through amendment, cancellation, replacement grants or other means, unless the Company’s shareholders have approved the adjustment or amendment.

Awards under the 2004 Plan

Stock Options

The 2004 Plan provides both for incentive stock options as defined under Section 422 of the Code (“ISOs”) and non-qualified stock options (“Non-Qualified Options”) (collectively, “Options”). In general, the 2004 Plan provides that the purchase price for all common shares covered by each Option granted cannot be less than 100% of the fair market value of the common shares on the date of grant. In the case of any ISO granted to an individual who, on the effective date of grant, owns shares possessing more than 10% of the total combined voting power of all classes of Stock of the Company or any subsidiary of the Company (a “10% Shareholder”), the exercise price per share must be at least 110% of the fair market value of the common shares on the date of grant.

The purchase price for common shares covered by an Option must be paid in full at the time of exercise of the Option by cash or cash equivalents or, subject to certain limitations, by the delivery of common shares of the Company having a fair market value on the date of exercise equal to the exercise price or by a combination thereof.

Notwithstanding the designation of an Option as an ISO, to the extent that the aggregate fair market value (determined as of the date the ISOs are granted) of the common shares with respect to which ISOs are exercisable for the first time by the optionee during any calendar year under all stock option plans maintained by the Company exceeds $100,000, such Options will be treated as Non-Qualified Options.

The Committee has the authority to determine the term of an Option, up to a maximum of 10 years (5 years in the case of an ISO granted to a 10% Shareholder), and each Option will be exercisable as determined by the Committee. The Committee may accelerate the exercisability of an Option at any time.

Stock Appreciation Rights

A stock appreciation right (“SAR”) may be granted under the 2004 Plan. The Committee will determine the exercisability, vesting and duration of a SAR, provided that the maximum term of a SAR may not exceed 10 years.

Upon exercise of a SAR, the grantee will receive cash, common shares, or a combination of both equal to the product of (1) the excess of the fair market value of a common share on the date the SAR was exercised over the base price specified in the SAR Award Agreement; and (2) the number of shares as to which the SAR is being exercised. At the time of grant, the Committee may place a limitation on the amount payable upon exercise of a SAR. On or after the time of the grant, the Committee may provide for the payment of dividend equivalents on stock appreciation rights in cash or shares on a current, deferred or contingent basis.

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Restricted Stock

The 2004 Plan provides for Awards of restricted stock, which will contain such restrictions, terms and conditions as the Committee shall determine. Unless the Committee determines otherwise, the grantee of an Award of restricted stock will have the right to vote the shares and to receive all dividends and other distributions on the shares prior to vesting. Unless the Committee determines otherwise, the shares of restricted stock will be forfeited by the grantee if the grantee ceases to be employed by the Company or one of its subsidiaries prior to the end of the applicable restriction period.

Restricted Stock Units

The Committee may make Awards of stock units under the 2004 Plan which will represent the right of the grantee to receive a payment upon vesting or on any later date specified by the Committee equal to the fair market value of common shares. The Committee may provide for the settlement of stock units in cash, common shares, other securities or other property. Unless the Committee determines otherwise, Restricted Stock Units will terminate if the grantee ceases to be employed by the Company or one of its subsidiaries prior to the end of the applicable restriction period.

Deferred Shares and Deferred Stock Units

The Committee may make a deferred share or deferred stock unit award under the 2004 Plan, which will contain such restrictions, terms and conditions as the Committee shall determine including the deferral period and any vesting restrictions. During the deferral period, the participant will not have any rights under the award to transfer any right of ownership in the deferred shares, or to vote such shares, but the Committee may authorize the payment of dividends on the deferred shares in cash or additional stock on a current or deferred basis. Unless the Committee determines otherwise, all deferred shares and deferred stock units will terminate if the participant ceases to be employed by the Company or one of its subsidiaries prior to the end of the applicable restriction period.

Performance Award

Performance Awards consist of a right that is (i) denominated in cash and/or shares; (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during the applicable performance periods as the Committee shall establish; and (iii) payable at such time and in such form as the Committee will determine. The Committee will determine the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award and the amount and kind of any payment of any Performance Award. Payment of Performance Awards may be made in a lump sum or in installments following the close of the performance period or on a deferred basis.

Dividend Equivalent Rights

Dividend equivalent rights may be granted in conjunction with another Award (other than an Option). Grantees of dividend equivalent rights will be entitled to receive payments in single or multiple installments, as determined by the Committee, equivalent to all or some portion of the cash dividends payable with respect to common shares (as specified in the applicable Award agreement). Payments may be made in cash, common shares, other securities or other property or a combination thereof. Amounts payable in respect of dividend equivalent rights may be payable currently or, if so determined by the Committee, deferred until the lapsing of restrictions on the dividend equivalent rights or until the vesting, exercise, payment, settlement or other lapse of restrictions on the Award to which the dividend equivalent rights relate. If the amounts payable are deferred, the Committee will determine whether the deferred amounts are to be held in cash, reinvested in shares or, if the dividend equivalents are credited in connection with a Performance Award, credited as additional Performance Awards and paid if and when the underlying Award is paid.

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Performance-Based Awards

Performance Objectives applicable to performance shares or performance units may be expressed in terms of sales or revenues; gross margin or pre-tax margin; earnings before interest, taxes, depreciation and/or amortization; operating income or profit; operating efficiencies; return on equity, return on assets, return on capital, return on capital employed, return on investment; after tax operating income; net income; earnings per share; book value per share; cash flow(s); stock price; total shareholder return; strategic business objectives, consisting of one or more objectives based on meeting specified cost targets, business expansion goals, goals relating to acquisitions or divestitures; or other performance goals established by the Committee (the “Performance Objectives”). Prior to the lapse of restrictions on performance awards and any resulting payout to an individual who is subject to Section 162(m), the Committee must certify the extent to which the Performance Objectives have been satisfied.

Performance-Based Compensation

Unless, and except to the extent that the Committee determines otherwise, each Option, SAR, performance share and performance unit granted under the 2004 Plan is intended to constitute “performance-based compensation” within the meaning of Section 162(m)(4)(c) of the Code and the regulations thereunder. The Committee will not be entitled to exercise any discretion otherwise authorized under the 2004 Plan with respect to Awards intended to constitute performance-based compensation (within the meaning of such Code Section) if the ability to exercise or the exercise of the discretion would cause the compensation attributable to the Awards to fail to qualify as performance-based compensation.

Non-Employee Director Awards

The Board may provide that all or a portion of a Non-Employee Director’s annual retainer and/or meeting fees, or other forms of compensation, be payable (either automatically or at the election of a Non-Employee Director) in the form of Non-Qualified Stock Options, Restricted Stock, Restricted Stock Units, Deferred Shares of Deferred Stock Units. Non-Employee Directors currently are required to receive one-half of their annual retainers in Company common stock. Under the 1998 Plan Non-Employee Directors receive automatic grants of non-qualified stock options.

Deferral of Payments or Vesting

The Committee may provide for the deferral of the issuance or vesting in common shares or the payment of cash in respect of an Award granted under the Plan. The terms of any such deferral will be set forth in the applicable Award agreement.

Amendment and Termination

The Board of Directors may amend or terminate the 2004 Plan at any time, subject to the requirements of applicable law and applicable securities exchange regulations; provided that, without Shareholder approval, the Board may not increase the maximum number of shares available for issuance under the Plan (other than an increase resulting from a change in capitalization) or change the class of employees eligible to receive ISOs. However, the Board cannot make any change in the Awards that will impair the rights of the grantee therein without the consent of the grantee.

New Plan Benefits

The number and type of Awards that will be granted under the 2004 Plan are not determinable, as the Committee will make these determinations in its sole discretion.

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Change in Control

At the Committee’s discretion, any Award may provide for immediate vesting or lapse of all restrictions in the event of a “Change in Control” (as defined in the 2004 Plan).

Adjustments

The 2004 Plan provides that the Committee will determine the appropriate adjustments, if any, to outstanding Awards and the shares available for future Awards in connection with a reclassification, recapitalization, stock dividend, stock split, reverse stock split, combination or reclassification of shares, or other unusual or non-recurring event affecting the Company or any of its subsidiaries or its other financial condition (such as a merger, spin-off or other change in corporate structure) (a “Change in Capitalization”).

Transferability

Awards granted under the 2004 Plan have transfer restrictions as provided for in the 2004 Plan. Non-Qualified Options, at the discretion of the Committee, may be transferred to or for the benefit of a participant’s immediate family, but ISOs may be transferred only by will or the laws of descent and distribution. The other Awards granted under the 2004 Plan are generally non-transferable.

Termination of Employment

The Committee has the full power and authority to determine the terms and conditions that apply to any Award upon a termination of employment and will provide such terms in the applicable Award Agreement.

Tax Withholding

If a grantee recognizes taxable income in connection with the receipt of common shares or cash under the 2004 Plan, the grantee may be required to pay to the Company or its applicable subsidiary the federal, state and local taxes and other amounts required from any compensation payable to the grantee (including under any Award) to be withheld by the Company in connection with such receipt prior to the issuance of the shares or payment of the cash. The Company is authorized to withhold from any compensation payable to the grantee (including under any Award) cash or a portion of the common shares issuable with a fair market value equal to the amount of withholding taxes in satisfaction of the obligation to pay the withholding taxes.

Federal Income Tax Consequences

Based on current provisions of the Code and the existing regulations thereunder, the anticipated U.S. federal income tax consequences in respect of Options granted under the 2004 Plan are as described below. The following discussion is not intended to be a complete statement of applicable law and is based on the U.S. federal income tax laws as in effect on the date hereof.

ISOs

All incentive stock options granted or to be granted under The 2004 Plan are intended to be incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). An optionee who is granted an ISO does not recognize taxable income either on the date of grant or on the date of exercise. The exercise of an ISO may result in alternative minimum taxable income liability in the year of exercise.

Upon disposition of common shares acquired from the exercise of an ISO, if the optionee has held the shares for the required holding period (two years from the date the option was granted and one year from the date of the transfer of the shares to the optionee) long-term capital gain or loss is generally recognized in an amount

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equal to the difference between the amount realized on the sale or disposition and the exercise price. However, if the optionee disposes of the common shares within two years of the date of grant or within one year of the date of the transfer of the common shares to the optionee (a “Disqualifying Disposition”), then the optionee will recognize ordinary income, as opposed to capital gain, at the time of disposition. In general, the amount of ordinary income recognized will be equal to the lesser of (a) the amount of gain realized on the disposition, or (b) the difference between the fair market value of the common shares received on the date of exercise and the exercise price. Any remaining gain or loss is treated as a short-term or long-term capital gain or loss, depending on the period of time the common shares have been held. The Company is not entitled to a tax deduction upon either the exercise of an ISO or the disposition of common shares acquired pursuant to the exercise of an ISO, except to the extent that the optionee recognizes ordinary income in a Disqualifying Disposition.

The 2004 Plan permits an optionee to pay all or part of the purchase price for common shares acquired pursuant to exercise of an incentive stock option by transferring to the Company other shares of the Company common stock owned by the optionee, and Section 422 of the Code provides that an option will continue to be treated as an incentive stock option if it is exercised in such manner. Upon the exchange, and except as otherwise described herein, no gain or loss is recognized by the optionee upon delivering previously acquired common shares to the Company as payment of the exercise price. The common shares received by the optionee, equal in number to the previously acquired common shares exchanged therefor, will have the same basis and holding period for long-term capital gain purposes as the previously acquired common shares. The optionee, however, will not be able to utilize the prior holding period for the purpose of satisfying the ISO statutory holding period requirements. Common shares received by the optionee in excess of the number of previously acquired common shares will have a basis of zero (plus, in the case of payment of the purchase price in a combination of cash and surrendered shares, the amount of any cash paid) and a holding period which commences as of the date the common shares are transferred to the optionee upon exercise of the ISO. If the exercise of any ISO is effected using common shares previously acquired through the exercise of an ISO, the exchange of the previously acquired common shares will be considered a disposition of the common shares for the purpose of determining whether a Disqualifying Disposition has occurred and, thus, whether ordinary income will be recognized. In such case, the optionee’s basis in the number of new common shares so acquired that is equal to the number of common shares surrendered will be equal to the optionee’s cost basis in the common shares surrendered plus the amount of ordinary income recognized. The optionee’s basis in the additional number of new common shares received will be zero plus, in the case of payment of the purchase price in a combination of cash and surrendered common shares, the amount of any cash paid. However, the incentive stock option stock acquired through the exchange of statutory option stock will still qualify for favorable tax treatment under Section 422 of the Code.

In general, an option granted under the 2004 Plan that is designated as an ISO will be taxed as described above. However, in some circumstances an option that is designated as an ISO will be treated as a Non-Qualified Option and the holder taxed accordingly. For example, a change in the terms of an option that gives the employee additional benefits may be treated as the grant of a new option. Unless all the criteria for treatment as an ISO are met on the date the “new option” is considered granted (such as the requirement that the exercise price of the option be not less than the fair market value of the stock as of the date of the grant), the option will be treated and taxed as a Non-Qualified Option. In addition, the aggregate fair market value (determined at the time the option was granted) of the shares with respect to which ISOs granted under the 2004 Plan are exercisable for the first time by an optionee during any calendar year may not exceed $100,000. Any excess over such amount will be deemed to be related to and part of a Non-Qualified Option.

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Non-Qualified Options

All options granted under the 2004 Plan that do not qualify as ISOs are Non-Qualified Options not entitled to special tax treatment under Section 422 of the Code.

An optionee receiving a Non-Qualified Option does not recognize taxable income on the date of grant of the Non-Qualified Option, provided that the Non-Qualified Option does not have a readily ascertainable fair market value at the time it is granted. In general, the optionee must recognize ordinary income at the time of exercise of the Non-Qualified Option in the amount of the difference between the fair market value of the common shares of the Company on the date of exercise and the option price. The ordinary income recognized will constitute compensation for which tax withholding generally will be required. The amount of ordinary income recognized by an optionee will be deductible by the Company in the year that the optionee recognizes the income if the Company complies with the applicable information reporting requirements.

Common shares acquired upon the exercise of a Non-Qualified Option will have a tax basis equal to their fair market value on the exercise date or other relevant date on which ordinary income is recognized, and the holding period for the common shares generally will begin on the date of exercise or such other relevant date. Upon subsequent disposition of the common shares, the optionee will recognize long-term capital gain or loss if the optionee has held the common shares for more than one year prior to disposition, or short-term capital gain or loss if the optionee has held the common shares for one year or less.

If an optionee pays the exercise price, in whole or in part, with previously acquired common shares, the optionee will recognize ordinary income in the amount by which the fair market value of the common shares received exceeds the exercise price. The optionee will not recognize gain or loss upon delivering the previously acquired common shares to the Company. Common shares received by an optionee, equal in number to the previously acquired common shares exchanged therefor, will have the same basis and holding period for long-term capital gain purposes as the previously acquired common shares. Common shares received by an optionee in excess of the number of such previously acquired common shares will have a basis equal to the amount of ordinary compensation income recognized as the result of the exercise of the option plus, in the case of payment of the purchase price in a combination of cash and surrendered shares, the amount of any cash paid. The holding period for the additional common shares will commence as of the date of exercise or such other relevant date.

Tax Treatment Upon a Change in Control

If Options under the 2004 Plan vest or are paid on an accelerated basis upon a Change in Control, some or all of the value of that acceleration may be considered an “excess parachute payment” under 280G of the Code, which would result in the imposition of a 20% federal excise tax on the recipients of the excess parachute payments and a loss of the Company’s deduction for the excess parachute payments.

Stock Appreciation Rights, Performance Awards, Restricted Stock Units, Deferred Shares and Deferred Stock Units

On the exercise of a stock appreciation right or upon the receipt of cash, common stock or other securities or other property with respect to a performance award, restricted stock unit, deferred share or deferred stock unit, the participant will recognize taxable ordinary income in an amount equal to the sum of the cash and the fair market value of the stock, other securities or other property, if any, received (determined as of the date of exercise of the stock appreciation right or the date of receipt of cash or common stock with respect to the performance award, restricted stock unit, deferred share or deferred stock unit). A 2004 Plan participant will not recognize a loss on the termination of an unexercised stock appreciation right, performance award, restricted stock unit, deferred share or deferred stock unit received under the 2004 Plan. Dividends paid on the deferred shares during the deferral period will be taxed to the participant as additional compensation. The basis in common shares, if any, so acquired, will be equal to the fair market value of the shares on the

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participant’s income recognition date, and the holding period for determining gains and losses on a subsequent disposition of such shares will begin on such date.

Restricted Stock

Generally, and except as noted below, the grant of restricted stock is not taxable at the time of the grant. Instead, at the time restricted stock vests or becomes transferable free of a substantial risk of forfeiture, a participant will recognize ordinary income equal to (i) the excess of the fair market value of such restricted stock on the date the shares vest or become transferable over (ii) the price, if any, paid for such restricted stock. An employee may, however, elect to recognize income as of the date of grant of the restricted stock in an amount equal to (i) the excess of the fair market value of the restricted stock on the date of grant over (ii) the price, if any, paid for the restricted stock (“Section 83(b) Election”). If such a Section 83(b) Election is made, no additional income will be recognized at the time the stock vests or becomes transferable. In the event of a subsequent forfeiture of the shares, a participant making such an election may be able to recognize a capital loss with respect to the amount, if any, paid for such restricted stock, but only to the extent such amount exceeds the amount realized by such employee on such forfeiture. The participant will not be able to recognize a loss for tax purposes with respect to the excess of the fair market value over the purchase price that was previously included in income. Dividends paid on the shares of restricted stock before they vest will be taxed to the participant either as additional compensation or, if the participant has made a Section 83(b) Election, as dividend income. The basis in common shares, if any, so acquired, will be equal to the fair market value of the shares on the participant’s income recognition date, and the holding period for determining gains and losses on a subsequent disposition of such shares will begin on such date.

Dividend Equivalent Rights

Dividends or cash, common shares, other securities or other property received in lieu of a dividend will be taxed to the participant as compensation income, unless, as discussed above, the dividend or dividend equivalent right is received with respect to restricted stock for which the participant has made a Section 83(b) Election.

Performance Based Compensation

Section 162(m) of the Code disallows a federal income tax deduction for certain compensation in excess of $1 million per year paid to each of the Company’s chief executive officer and its four other most highly compensated executive officers. Compensation that qualifies as “performance-based compensation” is not subject to the $1 million limit. It is anticipated that, in general, the Committee will operate the 2004 Plan in a manner designed to avoid loss of the Company’s tax deduction relating to Options because of Section 162(m).

Vote Required

A majority of all the votes cast at the Annual Meeting once a quorum is present will be sufficient to approve the 2004 Plan. Under Maryland law, the effect of an abstention is the same as a “no” vote. Broker non-votes are prohibited with respect to this matter.

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Equity Compensation Plan Information

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE PROPOSAL TO ADOPT THE 2004 LONG — TERM INCENTIVE PLAN.

Unless otherwise indicated, the persons named in the form of proxy will vote all shares in favor of the proposal to adopt the 2004 Plan.

PROPOSALS OF SHAREHOLDERS

Proposals of shareholders intended to be presented at the 2005 Annual Meeting of Shareholders of the Company must be received by the Secretary of the Company, at 780 Johnson Ferry Road, Suite 800, Atlanta, Georgia 30342, no later than November 29, 2004, to be eligible for our proxy statement and proxy relating to that meeting.

In connection with the Company’s Annual Meeting of Shareholders to be held in 2005, if the Company does not receive notice of a matter or proposal to be considered by February 18, 2005, then the persons appointed by the Board of Directors to act as the proxies for such annual meeting (named in the form of proxy) will be allowed to use their discretionary voting authority with respect to any such matter or proposal raised at the annual meeting.

HOUSEHOLDING INFORMATION

Some banks, brokers and other nominees are participating in the practice of “householding” proxy statements and annual reports. This means that beneficial holders of the Company’s common stock who share the same address or household may not receive separate copies of this Proxy Statement and our 2003 Annual Report. We will promptly deliver an additional copy of either document to you if you write us at the following address: 780 Johnson Ferry Road, Suite 800, Atlanta, Georgia 30342 — Attention: Shareholder Relations.

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AVAILABILITY OF FORM 10-K AND ANNUAL REPORT TO SHAREHOLDERS

The Company’s Annual Report to Shareholders for the year ended December 31, 2003, which includes certain financial information about the Company, is being mailed to shareholders together with this Proxy Statement. Additional copies of the Annual Report, along with copies of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission (exclusive of documents incorporated by reference), are available without charge to shareholders upon written request to Shareholder Relations, Haverty Furniture Companies, Inc., 780 Johnson Ferry Road, Suite 800, Atlanta, Georgia 30342. These documents and other information may also be accessed from the Company’s Web site at www.havertys.com.

OTHER MATTERS

     As of the date of this Proxy Statement, we do not know of any matters, other than those stated above, that may come before the meeting. The persons named in the enclosed form of proxy or their substitutes will vote with respect to any such matters in accordance with their best judgment.

By Order of the Board of Directors

Jenny Hill Parker
Vice President,
Secretary and Treasurer

April 8, 2004
Atlanta, Georgia

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APPENDIX A

AUDIT COMMITTEE CHARTER

Organization

This Charter governs the operations of the Audit Committee. The Committee shall review and reassess the Charter at least annually and obtain the approval of the Board of Directors. The Committee shall be Members of, and appointed by, the Board of Directors and shall comprise at least three Directors, each of whom are independent of Management and the Company. Members of the Committee shall be considered independent as long as they do not accept any consulting, advisory, or other compensatory fee from the Company and are not an affiliated person of the Company or its Subsidiaries, and meet the independence requirements of the Stock Exchange listing standards and Rule 10A-3 of the Exchange Act. All Committee Members shall be financially literate, and at least one Member shall be an “Audit Committee financial expert,” as defined by SEC regulations.

Purpose

The Audit Committee shall provide assistance to the Board of Directors in fulfilling their oversight responsibility to the shareholders, potential shareholders, the investment community, and others relating to: the integrity of the Company’s financial statements; the financial reporting process; the systems of internal accounting and financial controls; the performance of the Company’s internal audit function and independent auditor; the independent auditor’s qualifications and independence; and the Company’s compliance with legal and regulatory requirements. In so doing, it is the responsibility of the Committee to maintain free and open communication between the Committee, independent auditor, the internal auditors, and Management of the Company.

In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the authority to engage independent counsel and other advisers as it determines necessary to carry out its duties.

Duties and Responsibilities

The primary responsibility of the Audit Committee is to oversee the Company’s financial reporting process on behalf of the Board and report the results of their activities to the Board. While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements, for the appropriateness of the accounting principles and reporting policies that are used by the Company, and for implementing and maintaining internal control over financial

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reporting. The independent auditor is responsible for auditing the Company’s financial statements and for reviewing the Company’s unaudited interim financial statements.

The Committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The Committee will endeavor to take appropriate actions to set the overall Corporate “tone” for quality financial reporting, sound business risk practices, and ethical behavior. The following shall be the principal duties and responsibilities of the Audit Committee. These are set forth as a guide with the understanding that the Committee may amend or supplement them as appropriate.

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APPENDIX B

HAVERTY FURNITURE COMPANIES, INC.

2004 LONG-TERM INCENTIVE PLAN

TABLE OF CONTENTS

HAVERTY FURNITURE COMPANIES, INC.
2004 LONG-TERM INCENTIVE PLAN

SECTION 1 - Purpose

This plan shall be known as the “Haverty Furniture Companies 2004 Long-Term Incentive Plan” (the “Plan”). The purpose of the Plan is to promote the interests of Haverty Furniture Companies, Inc., (the “Company” or “Havertys”), and its shareholders by (i) attracting and retaining officers, employees, and non-employee directors of the Company and its Subsidiaries, (ii) motivating such individuals by means of performance-related incentives to achieve long-range performance goals and increased shareholder value, (iii) enabling such individuals to participate in the long-term growth and financial success of the Company, (iv) encouraging ownership of stock in the Company by such individuals, and (v) linking compensation to the long-term interests of shareholders. With respect to any awards granted under the Plan that are intended to comply with the requirements of “performance-based compensation” under Section 162(m) of the Code (as defined below), the Plan shall be interpreted in a manner consistent with such requirements.

SECTION 2 - Definitions

As used in the Plan, the following terms shall have the meanings set forth below:

“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Deferred Share, Deferred Stock Unit, or Performance Award granted under the Plan, whether singly or in combination, to a Participant pursuant to such terms, conditions, restrictions and/or limitations, if any, as may be established at the time of grant or such other time as permitted under the Plan.

“Award Agreement” shall mean any written or electronic agreement, contract, notice or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

“Base Price” shall mean the price to be used as the basis for determining the Spread upon the exercise of a Stock Appreciation Right.

“Board” shall mean the Board of Directors of the Company.

“Cause” shall mean (i) a Participant’s conviction, whether following trial or by plea of guilty or nolo contendere (or similar plea), in a criminal proceeding (A) on a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion, or (B) on a felony charge or (C) on an equivalent charge to those in clauses (A) and (B) in jurisdictions which do not use those designations; (ii) the engaging by a Participant in any conduct which constitutes an employment disqualification under applicable law (including statutory disqualification as defined under the Exchange Act); (iii) a Participant’s failure

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to perform his or her duties to the Company or its Subsidiaries; (iv) a Participant’s violation of any securities or commodities laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or commodities exchange or association of which the Company or any of its Subsidiaries or affiliates is a member; (v) a Participant’s violation of any policy of the Company or its Subsidiaries concerning hedging or confidential or proprietary information, or a Participant’s material violation of any other policy of the Company or its Subsidiaries as in effect from time to time; (vi) the engaging by a Participant in any act or making any statement which impairs, impugns, denigrates, disparages or negatively reflects upon the name, reputation or business interests of the Company or its Subsidiaries; or (vii) the engaging by the Participant in any conduct detrimental to the Company or its Subsidiaries. The determination as to whether “Cause” has occurred shall be made by the Committee in its sole discretion. The Committee shall also have the authority in its sole discretion to waive the consequences under the Plan or any Award Agreement of the existence or occurrence of any of the events, acts or omissions constituting “Cause.”

“Change in Control” shall mean, unless otherwise defined in the applicable Award Agreement, the occurrence of any one of (and shall be deemed to have occurred on the date of the earliest to occur of) the following events:

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Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to have occurred solely because any Person acquires beneficial ownership of more than twenty percent (20%) of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such Person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such Person, a Change in Control of the Company shall then occur.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Committee” shall mean a committee of the Board composed solely of not less than three Non-Employee Directors, all of whom shall (i) satisfy the requirements of Rule 16b-3(b)(3) of the Exchange Act, (ii) be “outside directors” within the meaning of Section 162(m) and (iii) otherwise meet any “independence” requirements promulgated by any stock exchange on which the shares are listed. The members of the Committee shall be appointed by and serve at the pleasure of the Board.

“Company” shall mean Haverty Furniture Companies, Inc., a Maryland corporation, and its successors and assigns.

“Covered Officer” shall mean at any date (i) any individual who, with respect to the previous taxable year of the Company, was a “covered employee” of the Company within the meaning of Section 162(m); provided, however, that the term “Covered Officer” shall not include any such individual who is designated by the Committee, in its discretion, at the time of any Award or at any subsequent time, as reasonably expected not to be such a “covered employee” with respect to the current taxable year of the Company, and (ii) any individual who is designated by the Committee, in its discretion, at the time of any Award or at any subsequent time, as reasonably expected to be such a “covered employee” with respect to the current taxable year of the Company or with respect to the taxable year of the Company in which any applicable Award will be paid.

“Deferral Period” shall mean the period of time during which Deferred Stock Units are subject to deferral limitations enumerated in Section 9 of this Plan.

“Deferred Share” shall mean any Share pursuant to Section 9 of this Plan providing the right to receive Shares at the end of a specified Deferral Period.

“Deferred Stock Unit” shall mean any unit pursuant to Section 9 of this Plan providing the right to receive Shares at the end of a specified Deferral Period.

“Disability” shall mean, unless otherwise defined in the applicable Award Agreement, total and permanent disability as defined in Section 22(e)(3) of the Code.

“Dividend Equivalents” shall mean amounts equivalent to the dividends paid on Shares of common stock. They may be granted in connection with Awards denominated in notional Shares, or they may be granted on a freestanding basis.

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“Employee” shall mean an employee of any Employer.

“Employer” shall mean the Company or any Subsidiary.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

“Fair Market Value” with respect to the Shares, shall mean, as of any date, (i) the closing sales price at which Shares were sold on the New York Stock Exchange, or, if the shares are not listed on the New York Stock Exchange, on any other such exchange on which the Shares are traded, on such date, or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) in the event there is no public market for the Shares on such date, the fair market value as determined in good faith by the Committee in its sole discretion.

“Incentive Stock Option” or “ISO” shall mean any Option that is intended to qualify as an “Incentive Stock Option” under Section 422 of the Code or any successor provision.

“Key Employee” shall mean an employee of Havertys or any Subsidiary or Parent Corporation who, in the judgement of the Committee acting in its absolute discretion, is key to the business performance and success of Havertys.

“Non-Employee Director” shall mean a member of the Board who is not an Employee and who has not been an officer of the Company or any of its Subsidiaries.

“Non-Qualified Stock Option” or “NQSO” shall mean any Option that is not intended to qualify as an Incentive Stock Option.

“Normal Retirement” shall mean, unless otherwise defined in the applicable Award Agreement, retirement of a Participant from the employ or service of the Company or any of its Subsidiaries in accordance with the terms of the applicable Company retirement plan at or after attainment of age 65, or if a Participant is not covered by any such plan, retirement on or after attainment of age 65.

“Option” shall mean an option to purchase Shares from the Company that is granted under Section 6 or 11 of the Plan.

“Option Price” shall mean the purchase price payable to purchase one Share upon the exercise of an Option.

“Participant” shall mean any Employee, Non-Employee Director, consultant or advisor who receives an Award under the Plan; provided that only Employees shall be eligible to receive grants of Incentive Stock Options; provided further, that consultants or advisors shall be eligible for Awards under the Plan only if (i) they are natural persons; (ii) they provide bona fide services to the Company or any of its Subsidiaries; and (iii) the services are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities.

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“Performance Award” shall mean any right granted under Section 10 of the Plan.

“Person” shall mean any individual, corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization, government or political subdivision thereof or other entity.

“Plan” shall mean this Haverty Furniture Companies, Inc. 2004 Long-Term Incentive Plan.

“Restricted Stock” shall mean any Share granted under Section 8 or 11 of the Plan.

“Restricted Stock Unit” shall mean any unit granted under Section 8 or 11 of the Plan.

“SEC” shall mean the Securities and Exchange Commission or any successor thereto.

“Section 16” shall mean Section 16 of the Exchange Act and the rules promulgated thereunder and any successor provision thereto as in effect from time to time.

“Section 162(m)” shall mean Section 162(m) of the Code and the rules promulgated thereunder or any successor provision thereto as in effect from time to time.

“Shares” shall mean shares of the common stock, $1.00 par value, as adjusted from time to time for stock splits or reverse stock splits, of the Company.

“Spread” means, in the case of a Stock Appreciation Right, the amount by which the Fair Market Value on the date when any such right is exercised exceeds the Base Price specified in such right.

“Stock Appreciation Rights” shall mean a right granted under Section 7 of this Plan.

“Subsidiary” shall mean any Person which is a “subsidiary corporation” (as that term is defined in Code Section 424(f)) with respect to the Company.

“Substitute Awards” shall mean Awards granted solely in assumption of, or in substitution for, outstanding awards previously granted by a Person acquired by the Company or with which the Company or one of its Subsidiaries combines.

“Termination of Employment” shall mean the termination of the employee-employer relationship between a Participant and the Employer for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, Workforce Reduction or Retirement, but excluding (i) terminations where there is a simultaneous reemployment or continuing employment of a Participant by another Employer; (ii) at the discretion of the Committee, terminations which result in a temporary severance of the employee-employer relationship; and (iii) at the discretion of the Committee, terminations which are followed by the simultaneous establishment of a consulting relationship by an Employer with the former Employee. The Committee, in its absolute discretion, shall determine the effect of all matters and questions with respect to Awards under this Plan relating to Termination of Employment, including, but not by

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way of limitation, the question of whether a Termination of Employment resulted from a discharge for Cause, and all questions of whether particular leaves of absence constitute Terminations of Employment for purposes of this Plan. However, notwithstanding any provision of this Plan, an Employer has an absolute and unrestricted right to terminate an Employee’s employment at any time for any reason whatsoever, with or without Cause.

“Workforce Reduction” shall mean any termination of the employee-employer relationship between a Participant and the Employer as a result of the discontinuation by the Company of a business or line of business or a realignment of the Company, or a part thereof, or any other similar type of event, provided that the Committee or the Board has designated such discontinuation, realignment or other event as a “Workforce Reduction” for purposes of this Plan.

SECTION 3 - Administration

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SECTION 4 - Shares Available for Awards

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SECTION 5 - Eligibility

Any Employee (including any officer or employee-director of an Employer), Non-Employee Director, consultant or advisor (subject to the limitations set forth in the definition of “Participant” in Section 2) shall be eligible to be designated a Participant; provided, however, that Non-Employee Directors shall only be eligible to receive Awards granted pursuant to Section 11 hereof.

SECTION 6 - Stock Options

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SECTION 7 - Stock Appreciation Rights

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SECTION 8 - Restricted Stock and Restricted Stock Units

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SECTION 9 - Deferred Shares and Deferred Stock Units

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SECTION 10 - Performance Awards

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SECTION 11 - Non-Employee Director Awards

The Board may provide that all or a portion of a Non-Employee Director’s annual retainer and/or meeting fees, or other forms of compensation, be payable (either automatically or at the election of a Non-Employee Director) in the form of Non-Qualified Stock Options, Restricted Stock, Restricted Stock Units, Deferred Shares or Deferred Stock Units. The Board shall determine the terms and conditions of any such Awards, including the terms and conditions which shall apply upon a termination of the Non-Employee Director’s service as a member of the Board, and shall have full power and authority in its discretion to administer such Awards, subject to the terms of the Plan and applicable law.

SECTION 12 - Provisions Applicable to Covered Officers and Performance-Based Awards

Notwithstanding anything in the Plan to the contrary, unless the Committee determines otherwise, all performance-based Restricted Stock Awards, Restricted Stock Unit Awards or Performance Awards shall be subject to the terms and provisions of this Section 12.

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SECTION 13 - Termination of Employment

The Committee shall have the full power and authority to determine the terms and conditions that shall apply to any Award upon a Termination of Employment and shall provide such terms in the Award Agreement. Notwithstanding the foregoing and subject to the limitation contained in the last sentence of Section 6(c) hereof, upon the Termination of Employment as a result of a Workforce Reduction of an Employee who has received an Award of Options, such Options shall expire on the date specified by the Committee at the time of the Termination of Employment.

SECTION 14 - Change in Control

At the Committee’s discretion, any Award may provide for the immediate vesting or lapse of all restrictions in the event of a Change in Control.

SECTION 15 - Amendment, Suspension and Termination

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SECTION 16 - General Provisions

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SECTION 17 - Term of the Plan