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 switch gears back to the technology sector and point out, despite the obvious criticisms, why Steve Ballmer of Microsoft is truly a class act.

Kudos to you, Mr. Ballmer
We can get those aforementioned "obvious criticisms" out of the way by pointing out that over the past decade, the broad-based S&P 500 has actually outperformed Microsoft to the tune of 55% to 37% (adjusted for dividends). However, the last time I checked a profit is a profit, and I've still yet to meet anyone who's been hurt by taking a profit!

Steve Ballmer's leadership often comes into question considering that Apple has out-innovated Microsoft and rapidly left the previously dominant software company in the dust to become the largest company in the world. Ballmer also takes heat for his company's multiple lackluster innovations in the mobile arena over the past few years. In fact, Ballmer has been identified as the "worst CEO" by Forbes.

Yet for each negative, there are multiple positives. Those positives include Microsoft's consistent track record that shows 129% revenue growth since 2003, as well as a doubling in free cash flow to more than $31 billion in fiscal 2012. It's achieved this by maintaining its dominance in PC-operating systems (i.e., Windows), as well as diversifying its product line to include mobile operating systems for Nokia's smartphone series, the Lumia. Microsoft has also recently introduced an Xbox music service, which could present a genuine threat to streaming music provider Pandora . Microsoft is a cash cow that dominates the software market and has a cash hoard that could buy a small country. Simply put, you don't achieve growth like this without solid leadership.

A step above his peers
Say what you want about Microsoft's underperformance relative to Apple, because Microsoft has plenty of other perks from a shareholder, personal, and employee perspective than meets the eye.

From a shareholder's viewpoint, I'm a firm believer that CEO compensation should properly reflect the performance of the stock. Steve Ballmer shares this view, taking home a minimal compensation package of just $1.3 million last year -- down 4% from the year earlier. Why such a small pay package for a man worth $15.9 billion? The reason has to do with Ballmer's very large personal holding in Microsoft stock -- 333.3 million shares, to be exact! If Ballmer wants a raise, shareholders are going to get one, too, which is why Microsoft's rising dividends perfectly align Ballmer's pay with the stock's performance. Unsurprisingly, Microsoft's quarterly payout has been raised by 188% in the past seven years.

From a personal perspective, Steve Ballmer has done his part to make large charitable contributions to help children and fund education within the United States. According to Forbes, Ballmer made a $10 million donation to Partners For Our Children, a Washington-based social and health-services welfare organization focused on helping children and families, as well as a $10 million donation to Harvard, his alma mater, this year alone.

Keeping with the theme begun by Bill Gates, Ballmer is a strong believer that employee perks and happy employees drive growth. Microsoft excels on this front as well, covering 100% of all health care costs for its employees and dependents, offering a generous 401(k), matching charitable contributions of up to $12,000 each year for its employees, and offering one unique perk: Autism therapy.

Two thumbs up
These perks are just the tip of the iceberg for what Microsoft truly offers its employees. If anything, I hope this has gone to show you that Ballmer is far from the "worst CEO" as described by Forbes. He continues to provide Microsoft with ample growth pathways, strong revenue and cash flow growth, and has a penchant for keeping community, shareholder, and employee interests always in the forefront. This may not be your parents' Microsoft anymore, but that doesn't mean it's anywhere near finished being a great investment. In short, I tip my hat to you, Mr. Ballmer, for a job well done.

Do you have a CEO you'd like to nominate for this prestigious weekly honor? If so, 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.

What does the long-term outlook hold for Microsoft? Get the answer to this question and much more by getting your copy of our latest premium research report on Microsoft. Packed with in-depth analysis on the opportunities and threats facing Microsoft -- and complete with a year of regular updates -- this report will give you the tools needed to make smart long-term investing decisions. Click here to get your copy.

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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 Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Apple, as well as creating a synthetic covered call position in Microsoft, and a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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