UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [    ]

Check the appropriate box:

[ x ]		Preliminary Proxy Statement
[    ]		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[    ]		Definitive Proxy Statement
[    ]		Definitive Additional Materials
[    ]		Soliciting Material Pursuant to Section 240.14a-12

Insteel Industries, Inc.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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[ x ]		No fee required
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January 5, 2010

Dear Shareholder:

You are cordially invited to attend the 2010 Annual Meeting of Shareholders of Insteel Industries, Inc. to be held Tuesday, February 9, 2010 at 9:00 a.m. Eastern Time. The meeting will take place at the Cross Creek Country Club, 1129 Greenhill Road, Mount Airy, North Carolina.

The attached proxy statement and formal notice of the meeting describe the matters expected to be acted upon at the meeting. We urge you to review these materials carefully and to use this opportunity to take part in the Company’s affairs by voting on the matters described in the proxy statement. At the meeting, we will also discuss our operations, fiscal year 2009 financial results and our plans for the future. Our directors and management team will be available to answer any questions you may have. We hope that you will be able to attend.

Your vote is important to us. Whether you plan to attend the meeting or not, please complete the enclosed proxy card and return it as promptly as possible. If you attend the meeting, you may elect to have your shares voted as instructed in the proxy or you may withdraw your proxy at the meeting and vote your shares in person. If you hold shares in “street name” and would like to vote at the meeting, you should follow the instructions provided in the proxy statement.

Thank you for your continued support and interest in Insteel Industries.

Sincerely,

H.O. Woltz III
Chairman of the Board

INSTEEL INDUSTRIES, INC.
1373 Boggs Drive
Mount Airy, North Carolina 27030
(336) 786-2141

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Date:		Tuesday, February 9, 2010
Time:		9:00 a.m., Eastern Time
Place:		Cross Creek Country Club 1129 Greenhill Road Mount Airy, North Carolina 27030

Dear Shareholder:

          At our Annual Meeting, we will ask you to:

	1.		Elect the three nominees named in this proxy statement to the Board of Directors, each for three-year terms;
	2.		Amend our Restated Charter to increase the number of shares of common stock we are authorized to issue to 50,000,000;
	3.		Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for our fiscal year 2010; and
	4.		Transact such other business, if any, as may properly be brought before the meeting or any adjournment thereof.

          Only shareholders of record at the close of business on December 7, 2009 are entitled to vote at the Annual Meeting.

          If you do not plan to attend the meeting and vote your common stock in person, please mark, sign, date and promptly return the enclosed proxy card or voting instruction form in the postage-paid envelope according to the instructions printed on the card.

          Any proxy may be revoked at any time prior to its exercise by delivery of a later-dated proxy or by properly voting in person at the Annual Meeting.

          Enclosed is a copy of our Annual Report for the year ended October 3, 2009, which includes our financial statements and other information regarding our business.

Mount Airy, North Carolina
January 5, 2010

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING			1
Why am I receiving this proxy statement and proxy card?			1
What is being voted on at the Annual Meeting?			2
Who is entitled to vote?			2
May I attend the meeting?			2
What constitutes a quorum in order to hold and transact business at the meeting?			2
How do I vote?			3
What are the Board’s recommendations?			3
Will other matters be voted on at the Annual Meeting?			3
Can I revoke or change my proxy instructions?			3
What vote is required to approve the election of directors?			4
What vote is required to approve the amendment of our Restated Charter and to ratify the appointment of our independent registered public accounting firm?			4
Will my Shares be voted if I do not sign and/or return my proxy card?			4
What other information should I review before voting?			5
Where can I find the voting results of the meeting?			5
What is Householding?			5
CORPORATE GOVERNANCE GUIDELINES AND BOARD MATTERS			5
The Board of Directors			5
Director Attendance at Annual Meetings			6
Committees of the Board			6
Executive Sessions			8
Code of Business Conduct			8
Board Governance Guidelines			8
Availability of Bylaws, Board Governance Guidelines, Code of Conduct and Committee Charters			8
Shareholder Recommendations and Nominations			9
Process for Identifying and Evaluating Director Candidates			9
Communications with the Board of Directors			9
VOTING SECURITIES			10
ITEM NUMBER ONE: ELECTION OF DIRECTORS			10
Introduction			10
Vote Required			11
Directors’ Recommendation			11
Information Regarding Nominees, Continuing Directors and Executive Officers			11

ITEM NUMBER TWO: AMENDMENT OF THE RESTATED CHARTER OF INSTEEL INDUSTRIES, INC. TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK			13
ITEM NUMBER THREE: RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP			15
EXECUTIVE COMPENSATION			17
Compensation Discussion and Analysis			17
I. Overall Objectives			17
II. Overview of Fiscal 2009 Compensation			19
III. Process for Establishing Executive Compensation and Description of Elements			21
Benchmarking			21
Base Salaries			21
Annual Incentive			22
Retirement Benefits			24
Deductibility of Compensation			26
Executive Compensation Committee Report			27
Summary Compensation Table			28
Grants of Plan-Based Awards			29
Outstanding Equity Awards at Fiscal Year End 2009			31
Options Exercised and Stock Vested During Fiscal Year			33
Pension Benefits			33
Potential Payments Upon Termination or Change in Control			34
DIRECTOR COMPENSATION			38
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION			39
REPORT OF THE AUDIT COMMITTEE			39
SECURITY OWNERSHIP			41
Section 16(a) Beneficial Ownership Reporting Compliance			41
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS			42
OTHER BUSINESS			43
SHAREHOLDER PROPOSALS FOR THE 2011 ANNUAL MEETING			43
Proposals for Inclusion in the Proxy Statement			43
Proposals for a Director Nominee and Related Procedures			44
Delivery of Notice of a Proposal			45
The Company’s Bylaws			45
EXPENSES OF SOLICITATION			45
ANNUAL REPORT AND FINANCIAL STATEMENTS			45

January 5, 2010

INSTEEL INDUSTRIES, INC.
1373 Boggs Drive
Mount Airy, North Carolina 27030
(336) 786-2141

PROXY STATEMENT

Important Notice Regarding the Availability of Proxy Materials for the Shareholder
Meeting to be held on February 9, 2010:

The Notice of Annual Meeting of Shareholders, Proxy Statement, Form of Proxy and 2009 Annual Report to the Shareholders are available on our corporate website at http://investor.insteel.com/annuals.cfm.

          This proxy statement is furnished in connection with the solicitation of proxies by our Board of Directors for use at the Annual Meeting of Shareholders to be held on Tuesday, February 9, 2010 at 9:00 a.m., Eastern Time, and at any adjournments or postponements of the Annual Meeting. The meeting will take place at the Cross Creek Country Club, 1129 Greenhill Road, Mount Airy, North Carolina. This proxy statement, accompanying proxy card and the 2009 Annual Report, which includes our financial statements, are first being mailed to our shareholders on or about January 5, 2010.

          This proxy statement summarizes certain information you should consider before you vote at the Annual Meeting. However, you do not need to attend the Annual Meeting to vote your shares. If you do not expect to attend or prefer to vote by proxy, you may follow the voting instructions on the enclosed proxy card. In this proxy statement, Insteel Industries, Inc. is generally referred to as “we,” “our,” “Insteel Industries,” “Insteel” or “the Company.”

          The attached proxy card indicates the number of shares of Insteel Industries common stock that you own as of the record date of December 7, 2009. In this proxy statement, outstanding Insteel Industries common stock (no par value) is sometimes referred to as the “Shares.”

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

Why am I receiving this proxy statement and proxy card?

          You are receiving a proxy statement and proxy card from us because you owned shares of our common stock at the close of business on the December 7, 2009 record date for the 2010 Annual Meeting. This proxy statement describes matters on which we would like you, as a shareholder, to vote. It also gives you information on these matters so that you can make an informed decision.

          When you sign and return the proxy card, you appoint H.O. Woltz III and James F. Petelle, and each of them individually, as your representatives at the meeting. Messrs. Woltz III and Petelle will vote your Shares at the meeting as you have instructed them. This way, your Shares will be voted regardless of whether you attend the Annual Meeting. Even if you plan to attend the meeting, it is a good idea to complete, sign and return the enclosed proxy card in advance of the meeting just in case your plans change. Returning the proxy card will not affect your right to attend or vote at the Annual Meeting.

          If a matter comes up for vote at the Annual Meeting that is not described in this proxy statement or listed on the proxy card, Messrs. Woltz III and Petelle will vote your Shares, under your proxy, in their discretion. As of the date of this proxy statement, we do not expect that any matters other than those described in this proxy statement will be voted upon at the Annual Meeting.

What is being voted on at the Annual Meeting?

          At the Annual Meeting, shareholders entitled to vote will be asked to act upon the following matters as set forth in the accompanying notice of meeting:

	ο		the election of the three nominees named in this proxy statement to the Board of Directors, each for three-year terms as discussed herein;
	ο		the amendment of our Restated Charter to increase the number of shares of common stock we are authorized to issue to 50,000,000;
	ο		the ratification of our appointment of Grant Thornton LLP as our independent registered public accounting firm for our fiscal year 2010; and
	ο		any other matters that may properly come before the meeting or any adjournment or postponement thereof.

Who is entitled to vote?

          All holders of record of our Shares at the close of business on December 7, 2009 are entitled to receive notice of the Annual Meeting and to vote the Shares held by them on the record date. Each outstanding Share entitles its holder to cast one vote for each matter to be voted upon.

May I attend the meeting?

          All holders of record of our Shares at the close of business on the record date, or their designated proxies, are entitled to attend the Annual Meeting.

What constitutes a quorum in order to hold and transact business at the meeting?

          Consistent with state law and our bylaws, the presence, in person or by proxy, of holders of at least a majority of the total number of Shares entitled to vote is necessary to constitute a quorum for purposes of voting on a particular matter at the Annual Meeting. As of the record date, there were 17,524,386 Shares outstanding and entitled to vote at the Annual Meeting. Once a Share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and any adjournment thereof unless a new record date is or must be set for the adjournment. Shares held of record by shareholders or their nominees who do not vote by proxy or attend the Annual Meeting in person will not be considered present or represented at the Annual Meeting and will not be counted in determining the presence of a quorum. Signed proxies that withhold authority or reflect abstentions or “broker non-votes” will be counted for purposes of determining whether a quorum is present. “Broker non-votes” are proxies received from brokerage firms or other nominees holding Shares on behalf of their clients who have not been given specific voting instructions from their clients with respect to non-routine matters. See “Will my Shares be voted if I do not sign and/or return my proxy card?”

How do I vote?

          Voting by Holders of Shares Registered in the Name of a Brokerage Firm, Bank or Other Nominee. If your Shares are held by a brokerage firm, bank or other nominee (i.e., in “street name”), you should receive directions from your nominee that you must follow in order to have your Shares voted. “Street name” shareholders who wish to vote in person at the meeting will need to obtain a proxy form, sometimes referred to as a “voting instruction form,” from the brokerage firm or other nominee that holds their common stock of record.

          Voting by Holders of Shares Registered Directly in the Name of the Shareholder. If you hold your Shares in your own name as a holder of record, you may vote in person at the Annual Meeting or instruct the proxy holders named in the enclosed proxy card how to vote your Shares by mailing your completed proxy card in the postage-paid envelope that we have provided to you. Please make certain that you mark, sign and date your proxy card prior to mailing. All valid proxies received and not revoked prior to the Annual Meeting will be voted in accordance with instructions.

What are the Board’s recommendations?

          If no instructions are indicated on your valid proxy, the representatives holding proxies will vote in accordance with the recommendations of the Board of Directors. The Board of Directors recommends a vote:

          FOR the election of the three director nominees, each for three-year terms as set forth herein;

          FOR the amendment of our Restated Charter to increase the number of shares of common stock we are authorized to issue to 50,000,000; and

          FOR the ratification of our selection of Grant Thornton LLP as our independent registered public accounting firm for our fiscal year 2010.

Will other matters be voted on at the Annual Meeting?

          We are not aware of any matters to be presented at the Annual Meeting other than those described in this proxy statement. If any other matters not described in the proxy statement are properly presented at the meeting, Messrs. Woltz III and Petelle will vote your Shares, under your proxy, in their discretion.

Can I revoke or change my proxy instructions?

          You may revoke or change your proxy at any time before it has been exercised by:

	ο		notifying our Secretary at 1373 Boggs Drive, Mount Airy, North Carolina 27030 in writing before the Annual Meeting that you have revoked your proxy;
	ο		delivering a later dated proxy to our Secretary prior to or at the Annual Meeting; or
	ο		appearing in person and voting by ballot at the Annual Meeting.

          Any shareholder of record as of the record date attending the Annual Meeting may vote in person whether or not a proxy has been previously given, but the presence of a shareholder at the Annual Meeting without further action will not constitute revocation of a previously given proxy.

What vote is required to approve the election of directors?

          The election of directors will be determined by a plurality of the votes cast at the Annual Meeting if a quorum is present. Shareholders do not have cumulative voting rights in connection with the election of directors. This means that the three nominees receiving the highest number of “FOR” votes will be elected as directors. Withheld votes and broker non-votes, if any, are not treated as votes cast, and therefore will have no effect on the proposal to elect directors.

What vote is required to approve the amendment of our Restated Charter and to ratify the appointment of our independent registered public accounting firm?

          Each proposal will be approved if the votes cast in favor of the respective proposal exceed the votes cast against such proposal. Abstentions and broker non-votes are not treated as votes cast, and therefore will have no effect on the outcome of either proposal. The vote to approve our independent registered public accounting firm is an advisory vote, the results of which will be seriously considered by our Audit Committee.

Will my Shares be voted if I do not sign and/or return my proxy card?

          If your Shares are held in “street name” and you fail to give instructions as to how you want your Shares voted (a “non-vote”), the brokerage firm, bank or other nominee who holds Shares on your behalf may, in certain circumstances, vote the Shares in their discretion.

          With respect to “routine” matters, such as the ratification of the selection of our independent registered public accounting firm, a brokerage firm or other nominee has authority (but is not required) under the rules governing self-regulatory organizations (the “SRO rules”), including the NASDAQ Global Select Market (“NASDAQ”), to vote its clients’ Shares if the clients do not provide instructions. When a brokerage firm or other nominee votes its clients’ Shares on routine matters without receiving voting instructions, these Shares are counted both for establishing a quorum to conduct business at the meeting and in determining the number of Shares voted FOR, ABSTAINING or AGAINST with respect to such routine matters.

          With respect to “non-routine” matters, such as the election of directors and the proposal to amend our Restated Charter, a brokerage firm or other nominee is not permitted under the SRO rules to vote its clients’ Shares if the clients do not provide instructions. The brokerage firm or other nominee will so note on the voting instruction form, and this constitutes a “broker non-vote.” “Broker non-votes” will be counted for purposes of establishing a quorum to conduct business at the meeting but not for determining the number of Shares voted FOR, WITHHELD FROM, AGAINST or ABSTAINING with respect to such non-routine matters.

          In summary, if you do not vote your proxy, your brokerage firm or other nominee may either:

	ο		vote your Shares on routine matters and cast a “broker non-vote” on non-routine matters; or
	ο		leave your Shares unvoted altogether.

          We encourage you to provide instructions to your brokerage firm or other nominee by voting your proxy. This action ensures that your Shares will be voted in accordance with your wishes at the Annual Meeting.

What other information should I review before voting?

          Our 2009 Annual Report, including financial statements for the fiscal year ended October 3, 2009, is included in the mailing with this proxy statement. The Annual Report, however, is not part of the proxy solicitation material. A copy of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), including the financial statements and financial statement schedules, may be obtained without charge by:

	ο		writing to our Secretary at: 1373 Boggs Drive, Mount Airy, North Carolina 27030;
	ο		accessing the EDGAR database at the SEC’s website at www.sec.gov;
	ο		accessing our website at http://investor.insteel.com; or
	ο		contacting the SEC by telephone at (800) SEC-0330.

          The contents of our website are not and shall not be deemed to be a part of this proxy statement.

Where can I find the voting results of the meeting?

          We will announce preliminary voting results at the Annual Meeting. We will publish the final results in our quarterly report on Form 10-Q for the second quarter of fiscal 2010. A copy of this quarterly report may be obtained without charge by any of the means outlined above for obtaining a copy of the Annual Report on Form 10-K.

What is Householding?

          The SEC rules allow for householding, which is the delivery of a single proxy statement and Annual Report to an address shared by two or more of our shareholders. A single copy of the Annual Report and the proxy statement will be sent to multiple shareholders who share the same address unless we have received contrary instructions from one or more of the shareholders.

          If you prefer to receive a separate copy of the proxy statement or the Annual Report, please write to Investor Relations, Insteel Industries, Inc., 1373 Boggs Drive, Mount Airy, North Carolina 27030; or telephone our Investor Relations Department at (336) 786-2141, and we will promptly send you separate copies. If you are currently receiving multiple copies of the proxy statement and Annual Report at your address and would prefer to receive only a single copy of each, you may contact us at the address or telephone number provided above.

CORPORATE GOVERNANCE GUIDELINES AND BOARD MATTERS

The Board of Directors

          The Board of Directors is currently comprised of eight members. Our bylaws provide that our Board of Directors must have not less than seven nor more than twelve directors.

          The Board of Directors oversees our business affairs and monitors the performance of management. In accordance with basic principles of corporate governance, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with the Chairman, key executive officers and our principal external advisers (legal counsel, auditors, investment bankers and other consultants), by reading reports and other materials that are sent to them and by participating in Board and committee meetings.

          At its meeting on August 25, 2009, the Board of Directors approved the establishment of a Nominating and Governance Committee. Prior to that, the process of evaluating and nominating

potential new Board members was assigned to the full Board, pursuant to our “Nominating and Corporate Governance Rules.” At the August 25, 2009 meeting, the Board also adopted new Board Governance Guidelines, which (along with the Charter of the Nominating and Governance Committee) replace the Nominating and Corporate Governance Rules. The Board Governance Guidelines may be found on our website at http://investor.insteel.com/documents.cfm.

          The Board of Directors, at its meeting in November 2009, determined that the following members of the Board, which constitute a majority thereof, each satisfy the definition of “independent director,” as that term is defined under NASDAQ listing standards: Louis E. Hannen, Charles B. Newsome, Gary L. Pechota, W. Allen Rogers II, William J. Shields and C. Richard Vaughn. In addition to considering the objective independence criteria established by NASDAQ, the Board also made a subjective determination as to each of these directors that no transactions, relationships or arrangements exist that, in the opinion of the Board, would interfere with the exercise of the director’s independent judgment in carrying out his responsibilities as one of our directors. In making these determinations, the Board reviewed information provided by the directors and us with regard to each director’s business and personal activities as they may relate to us and our management. Additionally, the Board specifically considered Mr. Newsome’s position as Executive Vice President and General Manager of Johnson Concrete Company, which purchased approximately $585,000 of materials from us during fiscal 2009, and determined that this relationship did not impair or otherwise affect Mr. Newsome’s status as an independent director. See “Certain Relationships and Related Person Transactions” for additional information regarding this relationship.

          Directors are expected to attend all meetings of the Board of Directors and all meetings of Board committees on which they serve. The independent directors meet in executive session with no members of management present before or after each regularly scheduled meeting (see “Executive Sessions” below). The Board of Directors met five times in 2009. Each of the directors attended at least 75% of the Board of Directors meetings and meetings held by committees of the Board of Directors of which they were members.

Director Attendance at Annual Meetings

          The Board has determined that it is in our best interest for all members of the Board of Directors to attend the Annual Meeting of Shareholders. All eight of our directors attended the 2009 Annual Meeting of Shareholders.

Committees of the Board

          The Audit Committee. The Board has an Audit Committee, which assists the Board in fulfilling its responsibilities to shareholders concerning our accounting, financial reporting and internal controls, and facilitates open communication between the Board, outside auditors and management. The Audit Committee discusses the financial information prepared by management, our internal controls and our audit process with management and with outside auditors. The Audit Committee is charged with the responsibility of selecting our independent registered public accounting firm. The independent registered public accounting firm meets with the Audit Committee (both with and without the presence of management) to review and discuss various matters pertaining to the audit process, including our financial statements, the scope and terms of its work, the results of its year-end audit and quarterly reviews, and its recommendations concerning the financial practices, controls, procedures and policies we employ. The Board has adopted a written charter for the Audit Committee as well as a Pre-Approval Policy regarding all Audit, Audit-Related, Tax and other Non-Audit Related Services to be performed by the independent registered public accounting firm.

          The Audit Committee is a separately-designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Securities Exchange Act of 1934 that consists of Messrs. Rogers (Chairman), Hannen and Pechota. The Board, at its meeting in November 2009, determined that each of the members of the Audit Committee meets the definition of “independent director” and certain Audit Committee-specific independence requirements under NASDAQ rules and is also independent under SEC requirements for Audit Committee members. At the same meeting, the Board also determined that each of the Committee’s members qualify as an “Audit Committee Financial Expert” as defined under SEC rules. The Board of Directors has also determined that each of the Audit Committee members is financially literate as such qualification is interpreted in the Board’s judgment. The functions of the Audit Committee are further described herein under “Report of the Audit Committee.” The Audit Committee met five times during fiscal 2009 and members of the Audit Committee consulted with management of the Company, the internal auditor and the independent registered public accounting firm at various times throughout the year. The charter for the Audit Committee, as most recently revised February 19, 2008, may be found on our website at http://investor.insteel.com/documents.cfm.

          The Executive Compensation Committee. The Executive Compensation Committee is responsible for (i) determining appropriate compensation levels for our executive officers, including any employment, severance or change in control arrangements; (ii) evaluating officer and director compensation plans, policies and programs; (iii) reviewing benefit plans for officers and employees; and (iv) producing an annual report on executive compensation for inclusion in the proxy statement. The following directors are the members of the Executive Compensation Committee: Messrs. Shields (Chairman), Newsome and Vaughn. The Board of Directors, at its meeting in November 2009, determined that each of the Executive Compensation Committee members meets the definition of “independent director” as that term is defined under NASDAQ rules. The Executive Compensation Committee Report is included in this proxy statement. The Executive Compensation Committee also reviews, approves and administers our incentive compensation plans and equity-based compensation plans and has sole authority for making awards under such plans, including their timing, valuation and amount. In addition, the Executive Compensation Committee reviews and recommends the structure and level of outside director compensation to the full Board. The Executive Compensation Committee has the discretion to delegate any of its authority to a subcommittee, but did not do so during fiscal 2009. The Executive Compensation Committee met three times during fiscal 2009. The charter of the Executive Compensation Committee, as adopted on September 18, 2007, may be found on our website at http://investor.insteel.com/documents.cfm.

          The Executive Compensation Committee regularly consults with members of our executive management team regarding our executive compensation program. Our executive compensation program, including the role members of our executive management team and outside compensation consultants play in assisting with establishing compensation, is discussed in more detail below under “Compensation Discussion and Analysis.”

          The Nominating and Governance Committee. The Nominating and Governance Committee was established by the Board or Directors at the August 25, 2009 Board Meeting. This committee is now responsible for establishing Board membership criteria, identifying individuals qualified to become Board members consistent with such criteria and recommending nominations of individuals when openings exist, recommending the appointment of Board committee members and chairs, reviewing corporate governance issues including periodically reviewing and recommending changes as necessary to the Board Governance Guidelines and our Code of Business Conduct and developing and facilitating an annual Board self-assessment process.

          At its August 25, 2009 meeting, the Board designated Messrs. Newsome, Pechota and Rogers as the initial members of the Nominating and Governance Committee. Subsequently, Mr. Pechota was designated Committee Chairman. The Committee first met on November 16, 2009 after the end of our

2009 fiscal year. The charter of the Nominating and Governance Committee may be found on our website at http://investor.insteel.com/documents.cfm.

Executive Sessions

          Pursuant to the listing standards of NASDAQ, the independent directors are required to meet regularly in executive sessions. Generally, those sessions are chaired by the lead independent director. The independent directors have determined that it is appropriate to periodically rotate the role of lead independent director. During fiscal 2009, the lead independent director was Mr. Vaughn. During these executive sessions, the lead independent director has the power to lead the meeting, set the agenda and determine the information to be provided. During fiscal 2009, the Board held four executive sessions. The lead independent director can be contacted by writing to Lead Independent Director, Insteel Industries, Inc., c/o James F. Petelle, Secretary, 1373 Boggs Drive, Mount Airy, North Carolina 27030. We screen mail addressed to the lead independent director for security purposes and to ensure that it relates to discrete business matters that are relevant to our Company. Mail that satisfies these screening criteria will be forwarded to the lead independent director.

Code of Business Conduct

          In keeping with the Board’s commitment to sound corporate governance, on August 11, 2003, the Board adopted a Code of Business Conduct (the “Code of Conduct”), which applies to our Company and all of its employees, officers and directors. The Code of Conduct incorporates an effective reporting and enforcement mechanism. The Board has adopted this Code of Conduct as its own standard. The Code of Conduct was prepared to help employees, officers and directors understand our standard of ethical business practices and to promote awareness of ethical issues that may be encountered in carrying out their responsibilities. The Code of Conduct is included in an employment manual, which is supplied to all of our employees and officers and in a Board of Directors Manual for directors, each of whom are expected to read and acknowledge in writing that they understand such policies.

Board Governance Guidelines

          In conjunction with the Board’s establishment of the Nominating and Governance Committee on August 25, 2009, the Board adopted Board Governance Guidelines to set forth the framework pursuant to which the Board governs the Company. Among other things, the Board Governance Guidelines describe the expectations regarding attendance at the Annual Meeting and at Board meetings, require regular meetings of independent directors in executive session, describe the functions of the Board’s standing committees, including an annual self-assessment process to be facilitated by the Nominating and Governance Committee and set forth the procedure pursuant to which shareholders may communicate with directors.

Availability of Bylaws, Board Governance Guidelines, Code of Conduct and Committee Charters

          Our Bylaws, Board Governance Guidelines, Code of Business Conduct, Audit Committee Charter, Audit Committee Pre-Approval Policy, Executive Compensation Committee Charter and Nominating and Governance Committee Charter are available on our website at http://investor.insteel.com/documents.cfm, and in print to any shareholder upon written request to our Secretary.

Shareholder Recommendations and Nominations

          The Nominating and Governance Committee Charter provides that the Committee will review the qualifications of any director candidates that have been properly recommended to the Committee by shareholders. Shareholders should submit any such recommendations in writing c/o Insteel Industries, Inc., 1373 Boggs Drive, Mount Airy, North Carolina 27030, Attention: James F. Petelle, Vice President and Secretary. In addition, in accordance with our bylaws, any shareholder entitled to vote for the election of directors at the applicable meeting of shareholders may nominate persons for election to the Board if such shareholder complies with the notice procedures set forth in the bylaws and summarized in “Shareholder Proposals for the 2011 Annual Meeting” below.

Process for Identifying and Evaluating Director Candidates

          Pursuant to its charter and our Board Governance Guidelines, the Nominating and Governance Committee is responsible for developing and recommending to the Board criteria for identifying and evaluating candidates to serve as directors. These criteria include standards for assessing independence; business and management experience; familiarity with our business, customers and suppliers; consideration of the diverse talents, backgrounds and perspectives of each candidate and the composition of the Board as a whole; integrity; leadership; ability to exercise sound judgment; other company board relationships and existing time commitments; and relevant regulatory and NASDAQ membership requirements for the Board and its committees. A candidate’s qualifications are evaluated based on these criteria when being considered for nomination or re-nomination to the Board for election at our annual meeting or to fill vacated or newly created positions on the Board.

          The Committee works with the Chairman of the Board to identify and recruit qualified director candidates in accordance with the director qualifications set forth in our Board Governance Guidelines, and also may retain a third party search firm to assist in the identification of possible candidates for election to the Board. In addition, the Committee will consider any director candidates that have been properly recommended to the Committee by our shareholders or directors. Upon the recommendation of the Committee, the Board evaluates each director candidate based upon the totality of the merits of each candidate and not based on minimum qualifications or attributes. When considering a director candidate standing for re-election, in addition to the above criteria, the Board will also consider that individual’s past contribution and future commitment to us. Upon completion of discussions by the full Board regarding the candidates recommended by the Committee, the Board determines, as applicable, whether to (i) approve and recommend one or more candidates to the shareholders for election at our annual meeting, or (ii) elect one or more candidates to fill vacated or newly created positions on the Board.

Communications with the Board of Directors

          The Board has approved a process for shareholders to send communications to the Board. Shareholders can send communications to the Board and, if applicable, to any of its committees or to specified individual directors in writing c/o Insteel Industries, Inc., 1373 Boggs Drive, Mount Airy, North Carolina 27030, Attention: James F. Petelle, Vice President and Secretary.

          We screen mail addressed to the Board, its Committees or any specified individual director for security purposes and to ensure that the mail relates to discrete business matters that are relevant to our Company. Mail that satisfies these screening criteria is required to be forwarded to the appropriate director or directors.

VOTING SECURITIES

          On the record date, to our knowledge, no one other than the shareholders listed below beneficially owned more than 5% of the outstanding shares of our common stock. For information regarding ownership of our common stock by our officers and directors, please see the “Security Ownership” table on page 41 of this proxy statement.

	Name and Address of			Number of Shares			Percentage of Shares
	Beneficial Owner			Beneficially Owned			Beneficially Owned
	Royce & Associates, LLC 745 Fifth Avenue New York, New York 10151			1,878,340(1)			10.7% (1)
	Third Avenue Management LLC 622 Third Avenue, 32nd Floor New York, New York 10017			1,092,688 (2)			6.2% (2)
	Met Investors Advisory, LLC and			1,074,384 (3)			6.1% (3)
	Met Investors Series Trust 5 Park Plaza, Suite 1900 Irvine, California 92614

	(1)		Based upon information set forth in a Schedule 13G/A filed with the SEC on April 7, 2009 by Royce & Associates, LLC reporting sole power to vote or direct the vote of 1,878,340 shares and sole power to dispose or direct the disposition of 1,878,340 shares.
	(2)		Based upon information set forth in a Schedule 13G filed with the SEC on February 13, 2009 by Third Avenue Management LLC (“TAM”) reporting sole power to vote or direct the vote of 1,092,688 shares and sole power to dispose or direct the disposition of 1,092,688 shares. Met Investors Series Trust-Third Avenue Small Cap Portfolio, an investment company registered under the Investment Company Act of 1940, has the right to receive dividends from, and the proceeds from the sale of, 1,074,384 of the shares reported by TAM. OFI Select-Third Avenue US Equity Fund, an offshore fund for which TAM acts as investment advisor, has the right to receive dividends from, and the proceeds from the sale of 18,304 of the shares reported by TAM.
	(3)		Based upon information set forth in a Schedule 13G filed with the SEC on February 13, 2009 by Met Investors Advisory, LLC (“Met Investors”) and Met Investors Series Trust (the “Trust”) reporting shared power of Met Investors and the Trust to vote or direct the vote of 1,074,384 shares and shared power of Met Investors and the Trust to dispose or direct the disposition of 1,074,384 shares. Met Investors, an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, serves as investment manager of each series of the Trust, an investment company registered under the Investment Company Act of 1940.

ITEM NUMBER ONE: ELECTION OF DIRECTORS

Introduction

          Our bylaws, as last amended April 21, 2009, provide that the number of directors, as determined from time to time by the Board, shall be not less than seven nor more than twelve. The Board has most recently fixed the number of directors at eight. The bylaws further provide that directors shall be divided into three classes serving staggered three-year terms, with each class to be as nearly equal in number as possible.

          The Board has nominated each of the persons named below to serve a three-year term expiring at the 2013 Annual Meeting of Shareholders or until their successors are elected and qualify. All of the nominees presently serve as our directors. The remaining five directors will continue in office as indicated. It is not contemplated that any of the nominees will be unable or unwilling for good cause to serve; but, if that should occur, it is the intention of the agents named in the proxy to vote for election of such other person or persons to serve as a director as the Board may recommend. If any director resigns, dies or is otherwise unable to serve out his term, or the Board increases the number of directors, the Board may fill the vacancy until the expiration of such director’s term.

Vote Required

          The nominees for director will be elected by plurality of the votes cast at the meeting at which a quorum representing a majority of all outstanding Shares is present and voting, either by proxy or in person. This means that the three nominees receiving the highest number of votes “FOR” will be elected as directors.

Directors’ Recommendation

          The Board of Directors unanimously recommends a vote FOR the election of each of the following three nominees to serve until the 2013 Annual Meeting. If you do not cast a vote with respect to a particular nominee on your proxy card, your vote will not count as either “for” or “withheld from” such nominee. Unless instructions are given to the contrary, it is the intention of the persons named as proxies to vote the Shares to which the proxy is related FOR the election of the slate of the following three director nominees.

Information Regarding Nominees, Continuing Directors and Executive Officers

          We have set forth below certain information regarding our nominees for director, our continuing directors and our executive officers. The age shown for each is his age on December 7, 2009, our record date.

          Nominees to serve until the 2013 Annual Meeting:

          Howard O. Woltz, Jr., 84, is our Chairman Emeritus, having served as Chairman of the Board from 1958 to February 2009. Mr. Woltz was employed by us and our predecessors in various capacities for more than 50 years before retiring as an executive officer in April 2005. He served as our President from 1958 to 1968 and from 1974 to 1989. Mr. Woltz also served as a Vice President, General Counsel and a director of Quality Mills, Inc., a publicly-held manufacturer of knit apparel and fabrics for more than 35 years until its acquisition in 1988 by Russell Corporation. Mr. Woltz is the father of H. O. Woltz III. Committee Membership: Executive Committee.

          C. Richard Vaughn, 70, a director since 1991, has been employed since 1967 by John S. Clark Company, Inc., a general building contracting company. Mr. Vaughn served as Vice President of John S. Clark from 1967 to 1970 and President from 1970 to 1988 and has served as Chairman of the Board and CEO from 1988 to the present. He also is Chairman of the Board of Riverside Building Supply, Inc. Committee Memberships: Executive Compensation Committee and Executive Committee. Mr. Vaughn currently serves as our lead director.

          Louis E. Hannen, 71, a director since 1995, served in various capacities with Wheat, First Securities, Inc., from 1975 until his retirement as Senior Vice President in 1993. Since his retirement in 1993, Mr. Hannen has been an investment advisor and consultant. Mr. Hannen had 30 years of experience in the securities analysis and research field, starting with the U. S. Securities and Exchange Commission in 1963. Mr. Hannen then worked for Craigie and Company from 1965 to 1970 and Legg Mason Wood Walker, Inc. from 1970 to 1975 before joining Wheat, First Securities. Committee Membership: Audit Committee.

          Directors with terms expiring at the 2011 Annual Meeting.

          Gary L. Pechota, 60, has been a director since 1998. Since 2007, Mr. Pechota has been the majority owner, President and CEO of DT-Trak Consulting, Inc., a company which provides medical coding and other revenue enhancement services to medical facilities. From 2005 to 2007 Mr. Pechota was a private investor after having served as Chief of Staff of the National Indian Gaming Commission from 2003 to 2005. He was a private investor and consultant from 2001 to 2003. Prior to that, Mr. Pechota served as the CEO and Chairman of the Board of Giant Cement Holding, Inc. from its inception in 1994 until 2001; was CEO of Giant Cement Company, a subsidiary of Giant Cement Holding, Inc., from 1993 to 2001; and CEO of Keystone Cement Company from 1992 to 2001. Prior to joining Keystone, Mr. Pechota served as President and CEO of South Dakota Cement from 1982 to 1992. Mr. Pechota is also a director of Black Hills Corporation and Texas Industries, Inc., both of which are publicly-held companies. Committee Memberships: Audit Committee and Nominating and Governance Committee.

          W. Allen Rogers II, 63, has been a director since 1986, except for a period of time during 1997 and 1998. Mr. Rogers is a Principal of Ewing Capital Partners, LLC, an investment banking firm founded in 2003. From 2002 to 2003 he was a Senior Vice President of Intrepid Capital Corporation, an investment banking and asset management firm. From 1998 until 2002, Mr. Rogers was President of Rogers & Company, Inc., a private investment banking boutique. From 1995 through 1997, Mr. Rogers served as a Managing Director of KPMG BayMark Capital LLC, and the investment banking practice of KPMG. Mr. Rogers served as Senior Vice President - Investment Banking of Interstate/Johnson Lane Corporation from 1986 to 1995 and as a member of that firm’s Board of Directors from 1990 to 1995. Committee Memberships: Audit Committee and Nominating and Governance Committee.

          William J. Shields, 77, has been a director since 1998. Mr. Shields served as Chairman of the Board and CEO of Co-Steel, Inc., an international steel producer and scrap recycling company, from 1995 to 1997. Mr. Shields also served as President and CEO of Co-Steel, Inc. from 1987 until 1995. Mr. Shields has been retired since 1997. Committee Membership: Executive Compensation Committee.

          Directors with term expiring at the 2012 Annual Meeting

          H. O. Woltz III, 53, was elected Chief Executive Officer in 1991 and has been employed by us and our subsidiaries in various capacities since 1978. He was named President and Chief Operating Officer in 1989 and was named Chairman of the Board in February 2009. He served as our Vice President from 1988 to 1989 and as President of Rappahannock Wire Company, formerly a subsidiary of our Company, from 1981 to 1989. Mr. Woltz has been a director since 1986 and also serves as President of Insteel Wire Products Company. Mr. Woltz served as President of Florida Wire and Cable, Inc. until its merger with Insteel Wire Products Company in 2002. Mr. Woltz is the son of Howard O. Woltz, Jr. Committee Membership: Executive Committee.

          Charles B. Newsome, 72, has been a director since 1982. He is Executive Vice President of Johnson Concrete Company and general manager of its affiliate, Carolina Stalite Company. Mr. Newsome has been affiliated with Johnson Concrete Company and Carolina Stalite Company for more than 25 years. Committee Memberships: Executive Compensation Committee and Nominating and Governance Committee.

          Named Executive Officers Who Are Not Continuing Directors or Nominees:

          In addition to Mr. Woltz III, the executive officers listed below were appointed by the Board of Directors to the offices indicated for a term that will expire at the next Annual Meeting of the Board of Directors or until their successors are elected and qualify. The next meeting at which officers will be appointed is scheduled for February 9, 2010, at which each of our executive officers is expected to be reappointed.

          Michael C. Gazmarian, 50, joined us in 1994 as Treasurer and Chief Financial Officer. In February 2007, he was elected Vice President, Chief Financial Officer and Treasurer. Before joining us, Mr. Gazmarian had been employed by Guardian Industries Corp., a privately-held glass manufacturer, since 1986, serving in various financial capacities.

          James F. Petelle, 59, joined us in October 2006. He was elected Vice President and Assistant Secretary on November 14, 2006 and Vice President - Administration and Secretary on January 12, 2007. Previously he was employed by Andrew Corporation, a publicly-held manufacturer of telecommunications infrastructure equipment, having served as Secretary from 1990 to May 2006, and Vice President – Law from 2000 to October 2006.

          Richard T. Wagner, 50, joined us in 1992 and has served as Vice President and General Manager of the Concrete Reinforcing Products Business Unit of the Company’s subsidiary, Insteel Wire Products Company, since 1998. In February 2007, Mr. Wagner was appointed Vice President of the parent company, Insteel Industries, Inc. Prior to 1992, Mr. Wagner served in various positions with Florida Wire and Cable, Inc., a manufacturer of PC strand and galvanized strand products, since 1977.

ITEM NUMBER TWO: AMENDMENT OF THE RESTATED CHARTER OF INSTEEL INDUSTRIES, INC. TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

          The Board of Directors has unanimously approved and recommended to our shareholders for their adoption an amendment to Article IV of our Restated Charter, as amended, to increase the number of authorized shares of common stock from 20,000,000 to 50,000,000, and correspondingly increase the aggregate number of authorized shares of all classes of our stock from 21,000,000 to 51,000,000. Throughout this proposal, we refer to our Restated Charter, as amended, as the “Charter” and to the amendment to Article IV of our Charter as the “amendment.” If the amendment is adopted by the shareholders, the first sentence of Article IV of our Charter will be amended to read in its entirety as follows:

          The corporation shall have authority to issue Fifty-One Million (51,000,000) shares of stock, consisting of: Fifty Million (50,000,000) shares of a class designated “Common Stock (No Par Value)”; and One Million (1,000,000) shares of a class designated “No Par Preferred Stock”, having no par value.

The remainder of Article IV, and our Charter, would be unchanged.

          We last increased the number of shares of common stock that we are authorized to issue under our Charter on July 30, 1984, prior to the initial public offering of shares of our common stock in April 1985. After taking into account the two-for-one split of our common stock that we distributed on June 16, 2006, we have (as of the record date disclosed on the first page of this proxy statement) 17,524,386 shares outstanding. In addition, 737,387 shares are reserved for issuance under our Equity Incentive Plan. Therefore, the number of authorized but unissued shares of common stock not reserved for a particular purpose is currently only 1,738,227, which we believe is inadequate to provide the Company with the flexibility necessary to respond to future needs and opportunities. Of the preferred stock authorized under the Charter, 900,000 shares are designated as Series A Junior Participating Preferred Stock, which we refer to as the “Series A Shares.” The Series A Shares, none of which are outstanding, are subject to issuance under our shareholder rights plan.

          If the amendment is approved, then the number of authorized but unissued shares of common stock not reserved for a particular purpose will be 31,738,227. The Board of Directors believes that the proposed increase in the number of authorized shares of common stock will benefit us by improving our flexibility in responding to future business needs and opportunities. The additional authorized shares will be available for issuance from time to time in connection with further stock splits, stock dividends, financings, acquisitions and employee benefit plans, if any, or for other corporate purposes which the Board of Directors may deem advisable. Additional shares that are authorized and issued will have the benefit of the rights provided by our shareholder rights plan. Our Board of Directors is seeking approval for the amendment at this time because opportunities requiring prompt action may arise in the future, and the Board believes the delay and expense in seeking shareholder approval for additional authorized common stock could deprive us and our shareholders of the ability to effectively benefit from potential opportunities. No further action or authorization by the shareholders would be necessary prior to the issuance of additional shares, except as may be required by laws or regulations applicable in particular circumstances. Certain large issuances of shares may require shareholder approval under NASDAQ rules that apply to us.

          The proposed increase in the number of authorized shares of common stock is not intended to impede a change of control of Insteel, and we are not aware of any current efforts to acquire control of Insteel. It should be noted, however, that the additional shares could be issued in connection with defending Insteel against a hostile takeover bid to dilute the equity ownership of a person or entity seeking to obtain control of Insteel, or in a private placement with purchasers who might side with the Board of Directors if it chose to oppose a specific change of control. These additional shares also could be issued in order to strengthen our management’s equity position or deter an attempt to replace our Board of Directors by diluting the percentage of shares held by persons seeking to control us by obtaining seats on the Board. An increase in our authorized common stock, taken together with our shareholder rights plan, may have the effect of discouraging unsolicited takeover attempts because additional shares would be available for issuance if the rights become exercisable. Accordingly, the amendment may have the effect of discouraging efforts to gain control of Insteel in a matter not approved by our Board of Directors. In addition, because the amendment may discourage certain attempts to gain control of Insteel, shareholders could be deprived of opportunities to sell their shares of common stock at an increased price that might result from a takeover attempt.

          We currently have no plans, understandings, agreements or arrangements concerning the issuance of additional shares of common stock not previously authorized for issuance by the Board. Insteel shareholders have no preemptive rights to acquire additional shares of common stock, which means that current shareholders do not have a right to purchase any new issue of shares of common stock in order to maintain their proportionate ownership interests in Insteel.

          Assuming the existence of a quorum, the proposal to amend Article IV of our Charter to increase the number of authorized shares of common stock will be approved if the votes cast in favor of the

proposal exceed the votes cast against the proposal. Abstentions and broker non-votes are not treated as votes cast, and therefore will have no effect on the outcome of this proposal.

          If the amendment is approved by our shareholders, it will become effective upon the filing of articles of amendment with the North Carolina Secretary of State in accordance with the North Carolina Business Corporation Act.

Board of Directors’ Recommendation

          The Board of Directors unanimously recommends that the shareholders vote FOR this proposal to amend our Charter to increase the number of authorized shares of common stock.

ITEM NUMBER THREE: RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP

Independent Registered Public Accounting Firm

          The Audit Committee of the Board has selected Grant Thornton LLP as our independent registered public accounting firm for our fiscal year ending October 2, 2010. We are submitting the selection of the independent registered public accounting firm for shareholder ratification at the Annual Meeting. We expect a representative of Grant Thornton LLP to be present at the Annual Meeting and he or she will be available to respond to appropriate questions from shareholders.

          Our organizational documents do not require that our shareholders ratify the selection of our independent registered public accounting firm. If our shareholders do not ratify the selection, the Audit Committee will reconsider whether to retain Grant Thornton LLP, but still may retain them nonetheless. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in our best interests.

Directors’ Recommendation

          The Board of Directors unanimously recommends a vote FOR ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for fiscal year 2010.

Fees Paid to Independent Registered Public Accounting Firm

          During fiscal 2009, the services of the independent registered public accounting firm included the audit of the annual financial statements, a review of our quarterly financial reports to the SEC, services performed in connection with the filing of our proxy statement and our Annual Report on Form 10-K with the SEC, attendance at meetings with our Audit Committee, consultation on matters relating to accounting, financial reporting and tax-related matters, and advisory services. Our Audit Committee approved all services performed by Grant Thornton LLP in advance of their performance. Grant Thornton LLP has served as our auditor since its appointment on July 27, 2002. Neither Grant Thornton LLP nor any of its associates have any relationship to us or any of our subsidiaries except in its capacity as auditors.

          Set forth below is certain information relating to the aggregate fees billed by Grant Thornton LLP, for professional services rendered for the fiscal years 2008 and 2009.

Type of Fee		2008				2009
Audit Fees		$	257,630			$	255,288
Audit-Related Fees			—				—
Tax Fees			—				—
All Other Fees			—				22,000
Total		$	257,630			$	277,288

          Audit Fees. Audit Fees include fees for the recurring annual integrated audit of our financial statements, as well as assistance with the review of the quarterly financial reports and other documents filed with the SEC.

          Tax Fees. No fees related to tax matters or other services were paid to Grant Thornton LLP in fiscal years 2008 or 2009.

          Audit-Related Fees. No fees for audit-related activities were paid to Grant Thornton LLP in fiscal years 2008 or 2009.

          All Other Fees. The fees for “other” services paid to Grant Thornton LLP in fiscal year 2009 were for advisory services not covered by the above categories.

Pre-Approval Policies and Procedures

          Our Board has adopted an Audit Committee Pre-Approval Policy whereby the Audit Committee is responsible for pre-approving all Audit, Audit-Related, Tax and other Non-Audit Related Services to be performed by the independent registered public accounting firm. The Board has authorized the Audit Committee Chair to pre-approve any Audit-Related, Tax or other Non-Audit Related Services that are to be performed by the independent registered public accounting firm that need to be approved between Audit Committee meetings. Such interim pre-approvals shall be reviewed with the full Audit Committee at its next meeting for its ratification.

          The Audit Committee Pre-Approval Policy is available on our website at http://investor.insteel.com/documents.cfm.

          The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the principal accountant’s independence.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

I.

Overall Objectives

          Insteel operates in an industry that is both highly competitive and cyclical. The Executive Compensation Committee (the “Committee”) believes that the success of the Company requires experienced leadership that fully understands the realities of Insteel’s challenging business environment and has demonstrated superior business judgment as well as the ability to successfully manage and operate the business. The Committee’s goal in developing its executive compensation system has been to attract, motivate and retain executives who will be successful in this environment and thus enhance the value of the business for our shareholders.

          The Company is committed to “pay for performance” at all levels of the organization and accordingly a substantial proportion of each executive officer’s total compensation is variable, meaning the executive officer’s total compensation will be determined based upon the Company’s performance. The Committee does not currently have a fixed formula to determine the percentage of pay that should be variable, but reviews annually the mix between base salary and variable compensation to ensure that its goal of paying for performance will be achieved.

          The Committee also believes it is critically important to retain executive officers who have demonstrated their value to the Company. Accordingly, several elements of our compensation system are intended to provide strong incentives for executive officers to remain employed by us. For example, we provide a non-qualified supplemental retirement benefit to executive officers that requires a minimum of 10 years of service before any benefit is paid, and 30 years of service to earn the full benefit provided (50% of base salary per year for 15 years following retirement).

          The Committee has developed its executive compensation system with the assistance of an independent consultant. The Consultant reports directly to the Committee and takes direction from the Committee regarding the scope of services it provides. For fiscal 2009, the Committee engaged Pearl Meyer & Partners (“Pearl Meyer”) to review our compensation program. We previously used a different independent consulting organization, Mercer, and retained Pearl Meyer for fiscal 2009 after the key partner handling our compensation matters at our former consulting organization resigned to join Pearl Meyer. Neither consultant performed any other services for Insteel during fiscal 2008 or 2009, and it is the Committee’s policy that its independent consultant shall not perform other services for the Company. The Committee is responsible for establishing the CEO’s compensation, and it reviews and approves recommendations from the CEO regarding the compensation of other executive officers. The Committee regularly meets in executive session without members of management present, and may consult with its consultant as necessary during its deliberations.

          Following are the features of the compensation system that support the attainment of the Committee’s fundamental objectives:

•

Attract, motivate and retain key executives by providing total compensation opportunities competitive with those provided to executives employed by companies of a similar size and/or operating in similar industries.

In formulating our approach to total compensation each year, the Committee requires its consultant, if one is retained, to provide peer

group data to benchmark our compensation system against systems of other companies in similar industries, as well as against systems of comparably-sized companies in other industries. Any consultant that we retain also advises the Committee on the overall design of our compensation system, as Pearl Meyer did during fiscal 2009.

The objective of our benchmarking process is to provide total compensation opportunities to our executive officers that are near the median of our peer group. Although comparisons to compensation levels in other companies are considered helpful in assessing the overall competitiveness of our compensation practices, the Committee does not feel the need to adhere precisely to the mathematical median, and it places a relatively greater emphasis on overall compensation opportunities rather than on setting each element of compensation at or near the median for that element.

•

Tightly link performance-based compensation to corporate performance.

	ο		Annual Incentive. As a public company, our goal is to create shareholder value. To motivate our executive officers to align their interests with those of our shareholders, we provide annual incentives which are designed to reward our executive officers for the attainment of short-term goals, and long-term incentives which are designed to reward them for increases in our shareholder value over time. The annual incentive for senior executives is based entirely on the Company’s return on capital, which is a measure that incorporates both the generation of earnings and the management of the Company’s balance-sheet and is closely correlated with long-term shareholder returns.
	ο		Long-Term Incentives. At this time, our long-term incentives are entirely equity-based, comprised of 50% restricted stock units (“RSUs”) and 50% options to purchase our common stock. Use of these equity-based incentives ensures that their value is directly linked to changes in the price of our common stock. Our long-term incentive program currently does not include a cash component.

•

Encourage long-term commitment to the Company.

We believe that the value provided by employees increases over time as they become increasingly knowledgeable about our industry, customers and competitors, as well as our business processes, people and culture. We believe that providing incentives for executive officers to remain with the Company will enhance the long-term value of the Company. Accordingly, we include programs such as Retirement Security Agreements and Change-in-Control Severance Agreements as components of our executive compensation system to provide such incentives. The full benefit under our Retirement Security Agreements is not achieved until our executive officer is employed by us for 30 years. The minimum benefit under these agreements requires 10 years of service.

II.

Overview of Fiscal 2009 Compensation

          Our executive compensation system is composed of base salary; our Return on Capital Incentive Compensation Plan (“ROCICP”) which provides for annual incentive payments; long-term incentives (currently consisting of RSUs and stock options); a supplemental retirement plan provided through Retirement Security Agreements with each executive officer; Change-in-Control Severance Agreements and (in the case of our CEO and CFO) Severance Agreements, each of which specifies payments and benefits upon, respectively, a change in control and involuntary termination; and certain other benefits such as medical, life and disability insurance and participation in the Company’s 401(k) retirement savings plan. We do not provide significant perquisites to executive officers.

A brief description of each element of our executive compensation system, as well as the objective of each element is set forth below.

Compensation Element		Description		Objective
Base Salary		Fixed cash compensation.		Provide basic level of income security.
				Compensate executive officers for fulfilling basic job responsibilities.
				Provide base pay commensurate with median salaries of peer group.
				Attract and retain key executive officers.
ROCICP Annual Incentive Program		Variable cash compensation paid pursuant to a plan in which all of our sales and administrative employees participate.		Align executive compensation with shareholder interests because payment of the incentive is based on return on capital, a metric closely correlated with the creation of shareholder value.
				Reward executive officers based on actual returns generated relative to the Company’s weighted average cost of capital.
Long-Term Incentives		Variable compensation granted 50% as RSUs (vesting after three years) and 50% as stock options (vesting one-third each year for three years).		Further align executive compensation with shareholder interests, because the value of these incentives is directly linked to changes in the Company’s common stock price. Aid in retention and encourage long-term commitment to the Company.
Supplemental Retirement Plan (Retirement Security Agreement)		Non-qualified retirement plan providing additional income to executive officers for 15 years following retirement.		Aid in retention and encourage long-term commitment to the Company. Compensate for federal limits on qualified retirement plans.
Severance/Change-in-Control Severance (“CIC”) Agreements		Our CEO and CFO have severance agreements that specify payments to them in the event of involuntary termination. All executive officers have CIC agreements specifying their rights related to termination of employment following a change in control of the Company.		Encourage long-term commitment to the Company. Focus executives on shareholder interests. Provide transition assistance in the event of job loss.
Other Benefits		Medical, life and disability insurance; 401(k) savings plan.		Provide insurance and basic retirement benefits of the same nature that other Company employees receive.

III. Process for Establishing Executive Compensation and Description of Elements

          Benchmarking. In connection with its review of executive officer compensation, the Committee requested that Pearl Meyer perform a comprehensive analysis of total direct compensation provided to Insteel executive officers for fiscal 2007. Pearl Meyer created a custom peer group of seven publicly-traded companies in the steel and building products industries which are of roughly comparable size and complexity to Insteel. In addition, Pearl Meyer consulted a number of published surveys containing compensation data for comparable executive positions in manufacturing companies with comparable size and complexity to Insteel. The seven publicly-traded companies in the peer group, and their ticker symbols, are as follows:

NN Inc. (NNBR)
LB Foster Co. (FSTR)
Gibraltar Industries, Inc. (ROCK)
Dayton Superior Corp (DSUP)
RBC Bearings, Inc. (ROLL)
Keystone Consolidated Industries, Inc. (KYCN.OB)
Northwest Pipe Company (NWPX)

          The Pearl Meyer analysis indicated that base salaries of our executive officers are at about the 25^th percentile of peer-group companies. Annual targeted total cash compensation (i.e., base salary plus targeted annual incentive) is slightly below the 25^th percentile. However, due to company financial performance that exceeded the targeted return on capital in fiscal 2007 and 2008, resulting in annual incentive payments that exceeded target amounts, actual total cash compensation for our executive officers was at the 50^th percentile for those years. The Committee believes that our program thus creates an excellent alignment between executive pay and our financial performance. The report also noted that the proportion of our targeted total compensation that is represented by long-term incentives is somewhat greater than the peer group’s and the committee believes this further enhances the alignment of executive pay with our performance. Accordingly, the Committee determined that the basic structure of our executive compensation program would remain unchanged for fiscal 2009.

          The Committee also reviewed specific compensation levels for fiscal 2009. The Committee determined that, due to the anticipated deterioration in the Company’s financial results that was expected to persist through the year, no increases in base salary or other compensation would be provided to executive officers during fiscal 2009.

          Following is a detailed description of each of the elements of our compensation program.

          Base Salaries. Base salaries are established by the Committee and reviewed annually. The Committee does not necessarily adjust salaries annually and did not adjust them in fiscal 2009 in view of the anticipated deterioration in the Company’s financial results following the onset of the global financial crisis and recessionary conditions in the economy. In establishing and adjusting base salaries, the Committee considers the following factors:

	•		The executive’s performance;
	•		The responsibilities of the executive;
	•		The strategic importance of the position;
	•		Competitive market compensation information;
	•		Skills, experience and the amount of time the executive has served in the position; and
	•		The Company’s recent performance and current business outlook.

          Following the period of February 2000 to March 2005 during which salaries of executive officers were frozen, the Committee gradually increased salaries of executive officers. The Committee had recently sought to establish base salaries between the 25^th and 50^th percentile of the peer group. The Committee did not provide salary increases to our executive officers during fiscal 2009, and made only one salary adjustment during fiscal 2008.

          Annual Incentive. For a number of years, executive officers of Insteel have earned annual incentive compensation pursuant to our ROCICP. This plan applies to all of our sales and administrative employees, with target annual incentive payments ranging from 10% to 50% of annual base salary during fiscal 2009, and payments capped at twice the target incentive level. The target annual incentive payments for executive officers of the Company during fiscal 2009 were 50% of the executive’s annual base salary. Based on peer group information, the Committee believes our annual incentive opportunity for executive officers at maximum award levels is somewhat greater than the median for peer group companies, bringing potential total cash compensation near the median for our peer group. The Committee believes this balance between base salaries and annual cash incentives is appropriate, in that our executive officers’ cash compensation will be near the median for our peer group only if our short-term goals are achieved, and will exceed the median in the event of excellent performance.

          For fiscal 2009, we calculated our weighted average cost of capital (“WACC”) to be 15%. Since we were debt free during fiscal 2009, we established the WACC as the return that we believe would be expected by a prudent investor in our stock. Attaining a return equal to our WACC would have resulted in the payout of incentive compensation at the target bonus level. The performance level at which the maximum incentive payment would be earned was set at 20% of the beginning of the year invested capital (WACC + 5%) while the minimum threshold at which an incentive payment would be earned was set at 10% of the beginning of the year invested capital (WACC — 5%). Unlike our two prior fiscal years, during which our return on capital exceeded the level at which maximum incentives were earned, in fiscal 2009, we did not make any annual incentive payments since our return on capital fell below the minimum threshold.

          The Committee continues to believe that return on invested capital is an appropriate metric for the annual incentive in that it is driven off both the generation of earnings as well as responsible management of Company assets, and is closely correlated with the creation of shareholder value. Since responsible management of Company assets is an integral component of the annual incentive calculation, the Committee believes use of this program inherently restrains excessive risk-taking on the part of management. The amounts earned annually under the ROCICP are established strictly by formula. The ROCICP does not provide for increasing or decreasing the annual incentive based on subjective factors.

          During fiscal 2007, our Board of Directors amended the ROCICP to clarify that in the event of a material restatement of earnings, the Board has the right to recover payments previously made under the ROCICP, or to reduce future payments. In making a determination whether and from whom to recover previously paid awards, or to reduce future awards, the Committee will consider the amount of the restatement, the reason for the restatement, the role played by any executive officers in the actions and decisions leading to the restatement and any other factors the Committee deems relevant.

          Long-Term Incentives. Our long-term incentives are currently entirely equity-based, consisting of 50% RSUs and 50% stock options. These incentives are granted under our 2005 Equity Incentive Plan. The targeted amount of the awards was established by the Committee early in fiscal 2007 based on input from our independent consultant at that time, Mercer. The targeted amount of the long-term incentive was established at approximately the median for executives in similar positions, in the peer group of companies developed by Mercer. The targeted value of the long-term incentives for each executive officer during fiscal 2007 and fiscal 2008 was as follows; Mr. Woltz III: $600,000; Messrs. Gazmarian and Wagner: $275,000 each; Mr. Petelle: $110,000.

          The Committee obtained input from its new compensation consultant, Pearl Meyer, regarding our long-term incentive compensation early in fiscal 2009. Pearl Meyer presented data for the peer group of companies set forth above, as well as from compensation surveys for comparable executive positions in companies of similar size, industry and complexity to us. Based on the peer group and survey data, Pearl Meyer did not recommend an increase in the targeted value of our long-term incentives for fiscal 2009, and the targeted value of these incentives therefore remained unchanged for fiscal 2009.

          The RSUs and stock options are awarded in two equal tranches, with the first tranche effective on the date of the Company’s February annual meeting and the second tranche effective on the date that is six months after the annual meeting. These dates are typically about three weeks after release of our quarterly financial results. The Committee believes that providing these awards on predetermined dates that closely follow the reporting of our quarterly financial results is most appropriate. As noted in the section headed “Grants of Plan-Based Awards” below, the only recent exception to this policy involved an award of restricted stock in connection with the employment of Mr. Petelle in fiscal 2007.

          Prior to fiscal 2009, we awarded shares of restricted stock, instead of RSUs. We decided to award RSUs rather than shares of restricted stock because RSUs are initially less dilutive since RSUs are not considered outstanding shares until the shares are issued after the RSUs vest (unlike shares of restricted stock), and also because RSUs mitigate certain tax consequences of an equity award granted to an individual who is eligible to retire under our 2005 Equity Incentive Plan. We determined the number of shares of restricted stock to award in the same manner as we now determine how many RSUs to award, and the economic effect on the Company is substantially the same for each form of awards.

          The number of RSUs and the number of stock options to be awarded to each of our executive officers on each grant date is calculated based on the closing price on such date. For example, the target value of long-term incentives granted to Mr. Woltz III during fiscal 2009 was established by the Committee at $600,000 based on benchmarking data provided Mercer during fiscal 2007. Accordingly, he received the awards of RSUs and stock options in the amounts shown below on the dates indicated. Since the value of each grant of options and RSUs is pre-determined by the Committee, and the awards occur on pre-established dates, management does not participate in the process of granting these options and RSUs.

	Date																					ASC Topic 718
				Type of Grant			No. of Units					Closing Price					Value on the					Grant Date
																	Date of Grant					Value
	2/10/09			RSUs				19,868					$7.55					$150,003					$150,003
	2/10/09			Stock Options				32,609					$7.55					$150,001					$150,001
	8/10/09			RSUs				12,931					$11.60					$150,000					$150,000
	8/10/09			Stock Options				23,962					$ 11.60					$150,002					$150,002

          The value of each share of Company stock subject to a stock option was established with the assistance of a financial consultant retained by the Company to establish the value of our option grants for financial statement purposes. We and the consultant use a Monte Carlo option valuation model to establish the value of our stock options. The value of each share of stock subject to a grant of option on February 10, 2009 was established at $4.60 per option share on that date, and at $6.26 per option share on August 10, 2009. The values of the equity grants shown above reflect the full fair value on each award date, as compared with amounts shown in the Summary Compensation Table below, which (as required by SEC regulations) reflect the annual accounting cost to the Company of these, as well as previously awarded, equity grants in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation — Stock Compensation. Prior to fiscal 2008, we used a different option valuation method to determine how

many option shares to grant to executive officers. We changed to the Monte Carlo valuation model in order to be consistent with the valuation method that we use for financial reporting purposes.

          Prior to fiscal 2008, dividends on restricted shares were reinvested, and additional shares added as a result of reinvestment were vested and paid on the same schedule as the related restricted shares. Beginning in fiscal 2008, dividends on restricted shares have been paid in cash. We made this change to eliminate the administrative burden associated with issuing relatively small amounts of additional restricted shares in connection with payment of our quarterly dividend.

          We have not adopted formal stock ownership guidelines for our executive officers, since our executive officers with long service have generally been significant owners of our stock.

          Retirement Benefits. Our executive officers each participate in the 401(k) “defined contribution” plan that is available to substantially all Company employees. Under this plan the Company will match 50% of a participant’s contribution up to 7% of the participant’s eligible compensation. However, certain IRS regulations place significant limits on the ability of our executive officers to defer the same portion of their compensation as other participants and to receive a Company match at the same rate as other participants. To help compensate for these limits, but in a manner that provides significant incentives for executives to remain employed by the Company, the Committee has established supplemental retirement plans through retirement security agreements (each, an “SRP”) in which certain Company executives, including all its executive officers, participate. An executive officer is eligible for the full benefit under the respective SRP if he remains employed by us for a period of at least 30 years. In that case, we will pay the executive officer, during the 15-year period following the later of (i) retirement, or (ii) reaching age 65, a supplemental retirement benefit equal to 50% of the executive officer’s average annual base salary for the five consecutive years in which he received the highest base salary in the 10 years preceding retirement.

          An executive officer may receive reduced benefits under the SRP if he retires prior to completing 30 years of service, so long as the executive has reached at least age 55 and has completed at least 10 years of service. If the executive officer does not complete 10 years of service, no benefit is paid under the SRP. If he completes at least 10 years, but less than 30, the amount of the benefit will be reduced by 1/360^th for each month short of 360 months that he was employed by us.

          Under the SRP, we also provide for pre-retirement disability and death benefits. The disability benefit is payable to an executive officer if, due to disability, his employment terminates before reaching age 65 or completing 30 years of service. In this event, we would pay him, during the 10-year period following the date of disability, a supplemental retirement benefit that, when added to the benefits received (if any) by the executive officer under our long-term disability insurance plan for employees, is equal to 100% of the executive officer’s highest average annual base salary for five consecutive years in the 10-year period preceding the date on which his disability occurred. If the long-term disability insurance payments end prior to the end of the 10-year period, the pre-retirement disability benefit will continue for the remainder of the 10-year period in an amount equal to 50% of his highest average annual base salary for five consecutive years in the 10-year period preceding the date on which his disability occurred.

          The death benefit is payable in the event that the executive officer dies while employed by us. In this event, we will pay to the executive officer’s beneficiary, for a term of 10 years following his death, a supplemental death benefit in an amount equal to 50% of his highest average annual base salary for five consecutive years in the 10-year period preceding the date of his death.

          Change-in-Control Severance Agreements. We have entered into change-in-control severance agreements with each of our executive officers. These agreements specify the terms of separation in the event that termination of employment occurs following a change in control. The initial term of each agreement is two years and the agreements provide for subsequent automatic one-year renewal terms unless we or the executive officer provides notice of termination. The agreements do not provide assurances of continued employment, nor do they specify the terms of an executive officer’s termination should the termination occur in the absence of a change in control.

          The Committee first provided change-in-control severance agreements to our executive officers in May 2003 because it believed that such agreements should be provided to individuals serving in executive positions that can materially affect the consummation of a change-in-control transaction and are likely to be materially affected by a change in control.

          These agreements are consistent with the Committee’s overall objective of aligning the interests of executive officers and shareholders in that they provide protection to the executive officers in the event of job loss following a transaction. Absent this protection, the executive may be distracted by personal uncertainties and risks in the event of a proposed transaction or may not vigorously pursue certain transactions that would benefit shareholders due to potential negative personal consequences.

          Under the terms of these agreements, in the event of termination within two years of a change of control, Messrs. Woltz III and Gazmarian would receive severance benefits equal to two times base salary, plus two times the average bonus for the prior three years and the continuation of health and welfare benefits (including payment of premiums for “COBRA” coverage) for two years following termination. Messrs. Wagner and Petelle would receive severance benefits equal to one times base salary, plus one times the average bonus for the prior three years and the continuation of health and welfare benefits (including payment of premiums for “COBRA” coverage) for one year following termination. In addition, all stock options, restricted stock awards and RSUs outstanding immediately prior to termination would vest and, in the case of options, become exercisable for the remainder of the term provided for in the original agreement relating to each grant of options. Finally, we would pay up to $15,000 for outplacement services for Messrs. Woltz III, Gazmarian, Wagner and Petelle.

          The terms of the change-in-control severance agreements were based on prevailing practice at the time the agreements were entered into, as well as competitive pressures in securing and retaining the services of executive officers. The Committee determined to provide relatively greater change-in-control severance benefits for Mr. Woltz III, our CEO, and Mr. Gazmarian, our CFO, because it believed they would likely be most engaged in any negotiations leading to a transaction that would result in a change in control, and that they would be less likely to retain their positions following a change in control.

          Any termination benefits payable under a change-in-control severance agreement are subject to reduction if necessary to avoid the application of the “golden parachute” rules of Section 280G and the excise tax imposed under Section 4999 of the Internal Revenue Code. The agreements do not provide for a “gross up” of any payments to cover any tax liability that may be imposed on our executive officers.

          Severance Agreements. We have entered into severance agreements with Mr. Woltz III and Mr. Gazmarian. The severance agreements provide certain termination benefits in the event that we terminate the employment of Mr. Woltz III or Mr. Gazmarian without cause (as defined in each severance agreement). Each severance agreement provides for automatic one-year renewal terms unless we or Mr. Woltz III or Mr. Gazmarian provide prior notice of termination.

          We first entered into the severance agreements with Messrs. Woltz III and Gazmarian in December 2004. At that time, the Committee concluded that Messrs. Woltz III and Gazmarian, who were leading efforts to restructure the Company, required additional protection in the event that either of them

lost his position under circumstances in which he would not be entitled to benefits under his change-in-control severance agreement.

          Neither Mr. Woltz III nor Mr. Gazmarian would be entitled to termination benefits under a severance agreement (i) if his employment with us is terminated for cause, or (ii) if he is entitled to receive benefits under the change-in-control severance agreement described above.

          Under the terms of the severance agreements, if Mr. Woltz III or Mr. Gazmarian were terminated without cause, each would receive a lump sum severance payment equal to one and one-half times his annual base salary, and the continuation of health and welfare benefits (including payments of premiums for “COBRA” coverage), for 18 months following termination. In addition, all stock options, restricted stock awards and RSUs outstanding immediately prior to termination would vest and, in the case of options, become exercisable for the remainder of the term provided for in the original agreement relating to each grant of options. Finally, we would pay up to $15,000 for outplacement services for Mr. Woltz III or Mr. Gazmarian. At the time these agreements were entered into, the Committee believed their terms were comparable to those provided to senior officers of similar public companies.

          Any termination benefits payable under a severance agreement are subject to reduction if necessary to avoid the application of the “golden parachute” rules of Section 280G and the excise tax imposed under Section 4999 of the Internal Revenue Code.

          The Committee periodically reviews the payments that could be received by executive officers pursuant to their respective severance and change-in-control severance agreements, but does not consider the amount of the potential benefits under these agreements when it establishes the elements of each executive officer’s ongoing compensation.

          Broad-Based Employee Benefits. Our executive officers participate in employee benefit plans that are offered to all employees, such as health, life and disability insurance and our 401(k) retirement savings plan. Our salaried employees are entitled to designate a beneficiary who will receive a death benefit in the event of the employee’s death while he is employed by us. The amount of the death benefit is determined by the employee’s salary grade. The death benefit payable to beneficiaries of each of our executive officers is $500,000. We maintain “split dollar” life insurance policies on a broad group of employees, including each of our executive officers, to fund the payment of the death benefit. Proceeds of these policies are payable to us.

          Our broad-based employee benefit programs are reviewed periodically to ensure that these programs are adequate based on competitive conditions as well as cost considerations.

          Deductibility of Compensation. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to publicly held companies for compensation paid to certain executive officers, to the extent that compensation exceeds $1 million per officer in any year, although certain “performance-based” compensation is not subject to the deduction limit. We generally seek to maximize the deductibility for tax purposes of all elements of compensation.

          The Committee periodically reviews applicable tax provisions, such as Section 162(m), and may revise compensation plans from time to time to maximize deductibility. In addition, although the Committee’s current intention is to ensure full deductibility of future compensation, it retains the flexibility to take actions it deems necessary to attract, motivate and retain executive officers who will help us achieve our business goals.

Executive Compensation Committee Report

          The Executive Compensation Committee of the Company’s Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Company management. Based on this review and discussion, the Executive Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the year ended October 3, 2009.

          This Executive Compensation Committee report shall be deemed furnished in our Annual Report on Form 10-K for the year ended October 3, 2009, is otherwise not incorporated by reference into any of our previous filings with the SEC and is not to be deemed “soliciting material” or incorporated by reference into any of our future filings with the SEC, irrespective of any general statement included in any such filing that incorporates the Annual Report on Form 10-K referenced above or this proxy statement by reference, unless such filing explicitly incorporates this report.

EXECUTIVE COMPENSATION COMMITTEE

William J. Shields, Chairman
Charles B. Newsome
C. Richard Vaughn

Summary Compensation Table

     The following table and accompanying footnotes provide information regarding compensation of our Chief Executive Officer, Chief Financial Officer and our two other executive officers for the fiscal year ended October 3, 2009.

	SUMMARY COMPENSATION TABLE
																													Change in
																													Pension Value
																													And
																								Non-Equity					Nonqualified
																								Incentive					Deferred
	Name and													Stock					Option					Plan					Compensation					All Other
	Principal								Salary1					Awards2					Awards2					Compensation3					Earnings4					Compensation5					Total
	Position			Year					($)					($)					($)					($)					($)					($)					($)
	H. O. Woltz III				2009					438,269					286,465					280,359					-0-					335,510					43,935					1,384,538
	President and CEO				2008					430,000					212,482					216,155					430,000					-0-					15,711					1,304,348
					2007					421,346					145,602					161,702					421,346					9,600					14,242					1,173,838
	Michael C.				2009					254,808					126,509					126,818					-0-					105,900					23,719					637,754
	Gazmarian Vice President,				2008					250,000					96,446					97,392					250,000					3,500					9,434					706,772
	CFO and Treasurer				2007					244,808					65,414					71,710					244,808					18,700					7,814					653,254
	James F. Petelle				2009					163,077					54,727					48,699					-0-					28,130					62,268					356,901
	Vice President -
	Administration				2008					156,154					34,828					30,794					156,154					13,400					24,784					416,114
	and Secretary				2007					141,346					15,696					9,209					141,346					14,700					31,899					354,196
	Richard T.				2009					224,231					126,509					126,818					-0-					102,380					22,669					602,607
	Wagner Vice President -				2008					220,000					96,446					97,392					220,000					4,500					8,651					646,989
	General Manager, Insteel				2007					213,077					65,414					71,710					192,308					16,600					7,858					566,967
	Wire Products

	1.		Fiscal 2009 consisted of 53 weeks while fiscal 2008 and 2007 consisted of 52 weeks. The annual rate of pay for our executive officers during fiscal 2009 was as follows: Mr. Woltz III — $430,000; Mr. Gazmarian — $250,000; Mr. Petelle — $160,000; Mr. Wagner — $220,000.
	2.		Amounts reported reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year indicated, in accordance with ASC Topic 718, disregarding estimated forfeitures. The amounts therefore reflect the accounting expense of awards granted in and prior to each such fiscal year, and do not reflect the actual value, if any, that may be received by executive officers for their awards. Assumptions used in the calculation of these amounts for fiscal 2009 are set forth in Note 6 of our consolidated financial statements as reported in our

			Annual Report on Form 10-K for the year ended October 3, 2009 filed with the SEC. Dividends paid on restricted stock and dividend equivalents paid on RSUs are currently paid in cash and are reported in the “All Other Compensation” column.
	3.		Amounts reported for fiscal 2007 and 2008 represent cash incentive amounts accrued for these years under our ROCICP. No incentives were earned under the ROCICP for fiscal 2009.
	4.		Amounts reported for each fiscal year represent the increase in the present actuarial value during such fiscal year of the executive officer’s accumulated benefits under our RSP determined using interest rate assumptions consistent with those set forth in Note 9 of our consolidated financial statements as reported in our Annual Report on Form 10-K for the year ended October 3, 2009 filed with the SEC. These amounts were calculated based on the following discount rate assumptions as of the end of each fiscal year: 2006, 6.00%; 2007, 6.25%; 2008, 7.00%; and 2009, 5.50%. If the discount rate assumption had not been changed during fiscal 2009, the amounts reported in this column for fiscal 2009 would have been as follows: Mr. Woltz, $60,860; Mr. Gazmarian, $31,300; Mr. Petelle, $18,475; Mr. Wagner, $30,155. Executive officers may not be fully vested in the amounts reflected herein. We do not currently offer any program for deferring compensation and therefore there were no above-market earnings on deferrals that were required to be reported in this column.
	5.		Amounts shown for fiscal 2009 include (i) dividends paid on restricted shares and dividend equivalents paid on RSUs; (ii) the current dollar value attributed by the IRS to the death benefit program we provide to our executive officers; (iii) the amount of matching funds paid into our Retirement Savings Plan on behalf of the executive officers; and (iv) in the case of Mr. Petelle, reimbursement for relocation expenses, and tax gross-up on such reimbursement. The following table shows the amount of each component described above.

				Dividends/Dividend
				Equivalents Paid										401(k)										Tax Gross-up
				on Restricted					Death Benefit					Matching					Relocation					of Expense
				Shares and RSUs					Value					Payments					Expenses					Reimbursement
	Name			($)					($)					($)					($)					($)
	H. O. Woltz III				30,584					1,264					12,087					-0-					-0-
	Michael C. Gazmarian				13,951					958					8,810					-0-					-0-
	James F. Petelle				5,666					2,547					5,626					25,600					22,829
	Richard T. Wagner				13,951					958					7,760					-0-					-0-

Grants of Plan-Based Awards

          The following table provides information regarding (1) annual incentive compensation payments to our executive officers under our ROCICP, and (2) the value of stock options and RSUs awarded to our executive officers during fiscal 2009 under our 2005 Equity Incentive Plan.

          No incentives were earned under the ROCICP during fiscal 2009.

          Beginning in fiscal 2006, our practice has been to grant equity awards (stock options and restricted stock and, beginning in fiscal 2009, RSUs) on two dates each fiscal year: the date of our annual shareholders’ meeting and the date that is six months after the shareholders’ meeting. The one exception to this practice occurred in fiscal 2007 when we granted 1,695 shares of restricted stock to Mr. Petelle in connection with the commencement of his employment with us. This grant was made on November 14, 2006, the date Mr. Petelle was elected an executive officer by our Board of Directors.

     Stock options have a 10-year term and vest in equal annual increments of one-third of the amount of each grant on the first, second and third anniversaries of the grant date. Options are priced at the closing price of our stock on the date of grant, as reported on NASDAQ. The restrictions on restricted stock lapse three years after the date of award. During the restricted period, our executive officers may vote the shares, but may not sell or transfer them or use them as collateral. Prior to and throughout fiscal 2007, our practice with respect to dividends on restricted stock was that they were used to purchase additional shares of restricted stock. Beginning in fiscal 2008, and continuing in fiscal 2009 dividends on restricted shares were paid in cash. Beginning in fiscal 2009, we granted RSUs instead of shares of restricted stock. RSUs are settled in shares of our common stock at the end of three years. Our executives do not have the right to vote the shares represented by RSUs, and may not sell or transfer RSUs, or use them as collateral. We pay dividend equivalents in cash on outstanding RSUs.

     Generally, stock options, restricted stock, and RSUs are subject to forfeiture if an executive officer leaves our employ for reasons other than death, disability or retirement prior to vesting or lapse of restrictions. Pursuant to the Severance Agreements we have with Messrs. Woltz III and Gazmarian, vesting of stock options and lapse of restrictions on restricted stock and RSUs will accelerate in connection with a termination without cause. For all of our executive officers, if employment with us terminates due to death, disability or retirement, or without cause in connection with a change in control pursuant to the terms of our Change-in-Control Severance Agreements, the vesting of stock options and RSUs and lapse of restrictions on restricted stock will accelerate.

	GRANTS OF PLAN-BASED AWARDS
																													All Other
																								All					Option
																								Other					Awards:										Grant
																								Stock					Number										Date Fair
																								Awards:					of					Exercise					Value of
									Estimated Possible Payouts															Number					Securities					or Base					Stock
									Under Non-Equity Incentive Plan															of					Under-					Price of					and
									Awards2															Shares					lying					Option					Option
				Grant					Threshold					Target					Maximum					of Stock					Options					Awards					Awards
	Name			Date1					($)					($)					($)					(#)					(#)3					($/share)					($)4
	H. O. Woltz III				N/A										215,000					430,000
					2/10/09																				19,868					32,609					7.55					300,004
					8/10/09																				12,931					23,962					11.60					300,002
	Michael C.				N/A										125,000					250,000
	Gazmarian				2/10/09																				9,106					14,946					7.55					137,502
					8/10/09																				5,927					10,982					11.60					137,500
	James F. Petelle				N/A										80,000					160,000
					2/10/09																				3,642					5,978					7.55					54,996
					8/10/09																				2,371					4,393					11.60					55,004
	Richard T. Wagner				N/A										110,000					220,000
					2/10/09																				9,106					14,946					7.55					137,502
					8/10/09																				5,927					10,982					11.60					137,500

1.		The options granted on the dates shown in this column were granted under our 2005 Equity Incentive Plan, as amended.
2.		Our incentive award program is considered a non-equity incentive plan and is discussed above under “Compensation Discussion and Analysis.” There is no threshold amount payable under the program. The amounts shown in the “Target” column reflect each executive officer’s target bonus percentage of base salary set by the Executive Compensation Committee for fiscal 2009. The amounts shown in the “Maximum” column reflect the maximum amount payable to each executive officer under the program based on his target bonus percentage. No awards were paid to our executive officers under this program for fiscal 2009.
3.		For each option, the exercise price per share is the closing price of our common stock on NASDAQ on the grant date.
4.		Represents the grant date fair value computed in accordance with ASC Topic 718. The actual value an executive officer may receive depends on the market price of our stock, and there can therefore be no assurance that amounts reflected in this column will actually be realized.

          Our equity-based compensatory awards for fiscal 2009 were issued pursuant to our 2005 Equity Incentive Plan, which was previously approved by our shareholders. The maximum number of shares issuable under that plan may not exceed 1,770,000 shares, and awards settled in cash and shares subject to awards that were forfeited, canceled, terminated, expire or lapse for any reason do not count against this limit. Awards that may be granted under the plan include incentive options and non-qualified options, restricted stock awards and stock units, and performance awards. The number of shares reserved for issuance under the plan and the terms of awards may be adjusted upon certain events affecting our capitalization. The plan is administered by our Executive Compensation Committee. Subject to the terms of the plan, the Executive Compensation Committee has authority to take any action with respect to the plan, including selection of individuals to be granted awards, the types of awards and the number of shares of common stock subject to an award, and determination of the terms, conditions, restrictions and limitations of each award.

          Additional discussion regarding factors that may be helpful in understanding the information included in the Summary Compensation Table and Grants of Plan-Based Awards table is included above under “Compensation Discussion and Analysis.”

Outstanding Equity Awards at Fiscal Year End 2009

          The following table provides information regarding unexercised stock options and unvested stock awards held by our executive officers as of October 3, 2009, the last day of our fiscal 2009. All values in the table are based on a market value of our common stock of $11.64, the closing price reported on NASDAQ on October 2, 2009, the last trading day during fiscal 2009.

	OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
	Option Awards																							Stock Awards
																													Market
				Number of					Number of															Number of					Value of
				Securities					Securities															Shares or					Shares or
				Underlying					Underlying															Units of					Units of
				Unexercised					Unexercised					Option					Option					Stock That					Stock That
				Options (#)					Options (#)					Exercise					Expiration					Have Not					Have Not
	Name			Exercisable1					Unexercisable1					Price ($)					Date					Vested (#)2					Vested ($)
	H. O. Woltz III				17,826					-0-					9.12					3/4/2015					71,434					831,492
					11,532					-0-					6.89					7/26/2015
					9,144					-0-					15.64					2/14/2016
					6,369					-0-					20.26					8/14/2016
					9,597					4,798					17.11					2/13/2017
					7,919					3,959					20.27					8/13/2017
					9,597					19,194					11.15					2/19/2018
					5,319					10,638					16.69					8/19/2018
					-0-					42,609					7.55					2/10/2019
					-0-					23,962					11.60					8/10/2019
	Michael C. Gazmarian				5,301					-0-					9.12					3/4/2015					32,741					381,105
					3,430					-0-					6.89					7/26/2015
					4,080					-0-					15.64					2/14/2016
					2,841					-0-					20.26					8/14/2016
					4,399					2,199					17.11					2/13/2017
					3,630					1,814					20.27					8/13/2017
					4,399					8,797					11.15					2/19/2018
					2,438					4,876					16.69					8/19/2018
					-0-					14,946					7.55					2/10/2019
					-0-					10,982					11.60					8/10/2019
	James F. Petelle				1,760					879					17.11					2/13/2017					14,799					172,260
					1,452					726					20.27					8/13/2017
					1,760					3,518					11.15					2/19/2018
					976					1,950					16.69					8/19/2018
					-0-					5,978					7.55					2/10/2019
					-0-					4,393					11.60					8/10/2019
	Richard T. Wagner				5,301					-0-					9.12					3/4/2015					32,741					381,105
					3,430					-0-					6.89					7/26/2015
					4,080					-0-					15.64					2/14/2016
					2,841					-0-					20.26					8/14/2016
					4,399					2,199					17.11					2/13/2017
					3,630					1,814					20.27					8/13/2017
					4,399					8,797					11.15					2/19/2018
					2,438					4,876					16.69					8/19/2018
					-0-					14,946					7.55					2/10/2019
					-0-					10,982					11.60					8/10/2019

1.		All of these options have become exercisable or will become exercisable as to one-third of the total number or shares covered by such option on each of the first, second and third anniversary of the grant date. The grant date in each case is 10 years prior to the option expiration date.
2.		These shares of restricted stock and RSUs will vest on the third anniversary of the date of grant. The number of shares that will vest on dates subsequent to the end of fiscal 2009 is shown in the following chart.

				11/18/09					2/13/10					8/13/10					2/19/11					8/19/11					2/10/12					8/10/12
	H.O. Woltz III				–					8,796					7,400					13,452					8,987					19,868					12,931
	Michael C. Gazmarian				–					4,031					3,392					6,166					4,119					9,106					5,927
	James F. Petelle				1,703					1,612					1,357					2,466					1,648					3,642					2,371
	Richard T. Wagner				–					4,031					3,392					6,166					4,119					9,106					5,927

Options Exercised and Stock Vested During Fiscal Year

          The following table provides information regarding compensation earned by our executive officers as a result of vesting of restricted stock during fiscal 2009. No executive officer exercised stock options during fiscal 2009.

Name		Option Awards									Stock Awards
		No. of
		Shares
		Acquired on				Value					No. of Shares
		Exercise				Realized on					Acquired on				Value Realized on
		(#)				Exercise ($)					Vesting (#)				Vesting ($)
H. O. Woltz III			0				0					9,277				87,254
Michael C. Gazmarian			0				0					4,138				38,920
James F. Petelle			0				0					0				0
Richard T. Wagner			0				0					4,138				38,920