This Is One Incredible CEO

The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here is last week's selection.

This week, I want to highlight the long-tenured CEO of Kroger (NYS: KR) , David Dillon, and demonstrate why his company's charitable actions should be applauded by communities everywhere.

Kudos to you, Mr. Dillon
The grocery industry is far from a glamorous sector. Margins for grocers are often razor-thin, loyalty among shoppers is practically nonexistent -- even with loyalty reward cards -- and there's always some sort of exterior pressure threatening to send prices through the roof and crush margins even more. This year we're dealing with a record drought that is causing corn prices to rise dramatically. Before that, we had seen coffee prices soar. In short, it's a competitive sector that doesn't allow any room for error.

That brings us to Kroger, the company behind such grocery chains as Fred Meyer, Food 4 Less, and Ralphs, as well as the self-named Kroger supermarkets. With many of its peers faltering because of rising costs, Kroger has delivered.

In Kroger's first-quarter results, the company highlighted an 11.4% increase in earnings as total sales rose 5.8%. Excluding fuel center revenue, which can fluctuate based on gas prices, Kroger's net sales rose 4.3%. This hasn't been the case for Kroger's peers, which have relied solely on fuel center sales to drive revenue growth. Safeway's (NYS: SWY) identical-store sales increased just 0.8% when fuel sales were stripped out, while SUPERVALU (NYS: SVU) , owner of Albertsons, disposed of many of its fuel centers and saw net sales dip 4.5% as it struggles with a huge debt load.

There have been solid performers in the grocery sector giving Kroger a run for its money, including Whole Foods Market (NYS: WFM) and Wal-Mart (NYS: WMT) . Whole Foods' co-CEOs have been featured as incredible CEO's previously for their pay-friendly atmosphere, while Wal-Mart recently turned its U.S. operations around and is relying on its bargain prices to draw consumers in. But ultimately Kroger has held its ground and delivered strong results in spite of an unfavorable pricing environment.

A step above his peers
Kroger is clearly able to hold its own in a tough environment, but its support for the communities in which it does business is the main reason why David Dillon deserves a pat on the back.

In 2010, Kroger was the only publicly traded company to donate more than 10% of its previous year's earnings away to charity -- the only company! Kroger donated $64 million, or 10.9% of its previous year's income, to various charities, including Food 4 Less' program to feed the hungry. The company also donated $1.5 million for military families and recently allowed the Salvation Army to set up its collection kettles outside its stores around Christmastime.

According to Kroger's website, the company has given an average of $14 million each month for the past five years -- a staggering total that would put it on pace to reach $1 billion in charitable contributions within the next year or so. Wal-Mart is no slouch, either, having donated almost $320 million in 2010; but relative to total income, it's a far cry from Kroger.

If you're still curious as to how Kroger is outperforming many of its peers in terms of same-store sales growth, it comes down to Kroger's superior connection within the communities it helps and works with -- period!

Two thumbs up
This is yet another week where we've seen that random acts of kindness win over consumers. It's not rocket science; it's the right thing to do.

As one of the nation's largest grocers, Kroger not only focuses on growing its brand and its bottom line for shareholders (it pays out a reasonable 2% yield, which could easily be boosted, given its payout ratio of just 41%), but also realizes that community-building is the way to go. Having worked for Kroger for 36 years (nine as CEO), Dillon exemplifies what being a family grocer is all about and is absolutely worthy of two thumbs up from me.

Do you have a CEO you'd like to nominate for this prestigious weekly honor? If so, then head on over to the new CEO of the Week board and chime in with your fellow Fools on who deserves some praise. If you don't have a nominee yet, don't worry: You can still weigh in on other members' selections.

Here at the Fool, we love management teams that have strong track records of rewarding their shareholders, which is why I invite you to download a copy of our latest special report: "Secure Your Future With 9 Rock-Solid Dividend Stocks." This report contains a wide array of companies and sectors that are likely to keep your best interests in mind, just like Kroger, whether the market is up or down. Best of all, it's completely free for a limited time, so don't miss out!

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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves giving credit when credit is due. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Whole Foods Market and SUPERVALU. Motley Fool newsletter services have recommended buying shares of Whole Foods Market. Motley Fool newsletter services have recommended buying calls on SUPERVALU. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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