This Is 1 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's my previous selection.

This week, we'll "step" into the retail sector and examine why Foot Locker CEO, Ken Hicks, is truly a class act.

Kudos to you, Mr. Hicks
Ken Hicks took the reins at Foot Locker during one of the toughest times in recent retail history. Since becoming CEO on Aug. 17, 2009, Foot Locker's dividend-adjusted share price has catapulted by 268%, or an average of about 2.9% per month!

However, the retail industry certainly isn't a walk in the park -- even for Foot Locker. Shoe retailers and footwear companies have all struggled to some extent as higher payroll taxes and delayed tax refunds have weighed on consumer spending habits domestically. Overseas, slower GDP growth in China has drastically slowed down Nike's plans of dominating the region. In Nike's most recent quarterly report, it grew its sales in all regions, except for China and Japan, where it was forced to step up discounting to move higher-than-expected inventories.

Constantly changing fashion styles also require continued innovation to keep customers loyal. Deckers Outdoor , the company behind the Ugg brand, has struggled in recent quarters as sheepskin costs have risen and its styles haven't clicked with younger consumers as well as they had in the past.

Even the stores themselves haven't fared too well. Finish Line's fourth-quarter results pointed to domestic weakness in its previously high-growth running business, which is a serious cause for concern.


And then there's Foot Locker, which increased its net sales last year by 11.4% on a 9.4% rise in same-store sales in spite of all these concerns. Foot Locker's success has come about because of a number of growth and cost-cutting initiatives.

First, Ken Hicks has kept a tight lid on expenses and worked on closing underperforming locations over the previous couple of years. Even the nation's biggest companies have stores that struggle, and recognizing which stores are unsuccessful and not allowing them to remain a drag are one of the keys to great leadership.

Hicks has also re-emphasized his company's focus on running shoes. Although Finish Line is seeing weakness with this category, Foot Locker has capitalized by rapidly expanding its direct-to-consumer offerings, targeting a younger generation of consumers, and giving consumers an unparalleled selection of name-brand footwear to choose from.

A step above his peers
The interesting aspect about Foot Locker is that's is so much more than just its bottom-line results. Ken Hicks has completely transformed the culture at Foot Locker for shareholders, employees, and its surrounding communities.

On top of the huge 268% surge in Foot Locker's share price since Hicks took over, shareholders have also seen a gigantic boost in their quarterly payout.

Source: *Assumes payout of $0.20 per quarter for remainder of 2013 and 2014.

Since 2003, Foot Locker's quarterly payout has risen 567%, from just $0.03 to what is now a $0.20 quarterly payout. With the yield currently at 2.2%, you'll struggle to find better dividend growth in the retail sector.

Foot Locker also does a good job of taking care of its employees. In addition to offering comprehensive health and dental packages to employees, Foot Locker will reimburse up to $5,200 worth of qualified tuition annually, provide wellness benefits like flu shot vaccinations and fitness membership discounts in some locations, and, of course, offer a hefty 30% discount off regularly priced merchandise. If you love shoes, you're bound to enjoy working for Foot Locker.

Ken Hicks also believes strongly in giving back to the communities that it operates in. During May, as part of the drive to help children with cancer, Foot Locker is donating 3% of its online proceeds to help fund research, as well as provide entertainment activities within hospitals to help children afflicted by cancer.

Two thumbs up
Ken Hicks has unquestionably transformed Foot Locker for the better under his tenure. His leadership has pushed the company to lower expenses, properly manage inventory, and focus on market-leading brands and younger consumers. In addition, Hicks has built a system that could be successful even if he's not around. As Hicks responded recently when questioned about leadership:

"CEOs should remember that if they take a day off, the world will keep turning -- but if their frontline managers disappear, the company will quickly come grinding to a halt. That means that it's vital to ensure your company isn't run as 'a top-down environment where everyone was told what to do,' but instead leverages the passion, insights, and customer-service talents of its employees."

Hicks has done a phenomenal job building value for shareholders, keeping employees happy, and giving back to the community. For that, I give him two emphatic thumbs up.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only the most forward-looking and capable companies will survive, and they'll handsomely reward investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. 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, and recommends, Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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