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Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on

Shareholder activists and federal regulators have thrown a record number of penalty flags at chief executives of late, complaining they're making excessive income for modest results.

In a lot of cases, the scrutiny is overdue. But as you might expect, the attack often goes too far, undermining the incentive system that makes U.S. business practices the world standard.

Rather than just pick on a few overpaid underachievers, how about some appreciation for the many well-compensated executives who deserve every penny of their seven-figure compensation packages? How about a hand for the turnaround artists and founding fathers who navigate their companies efficiently through the crazy maze of global trade by providing a great return on capital -- and doing it with integrity?

If running a big company were easy, a politician could do it. You can't buy dimes for nickels.

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Here are a few CEOs who defy the media stereotype by providing investors with both great economic and financial gain. They are deploying shareholder capital much more effectively than their peers, and their stocks are reasonably priced. I bet each of these companies will beat the indices this year.

Tracy W. Krohn, W&T Offshore

(WTI) - Get W&T Offshore, Inc. Report

. In 1984, the Houston native, a petroleum engineer by education and training, capitalized the company that would become W&T Offshore with $12,000 of his own money. He started out with the goal of acquiring oil and gas properties in Louisiana swampland that would generate $25,000 a year in cash flow.

After taking risks to explore in the Gulf of Mexico and withstanding industry busts when crude oil prices sank to $9 a barrel, his company is now generating $1 million in net revenue a day. The company has proven reserves of more than 5 billion cubic feet of natural-gas equivalent on 1 million acres in the Gulf. It's no wonder that W&T's return on capital, at 35.8%, is nearly triple the industry average.

Shares are up 74% since the company went public in February 2005. Krohn earns $750,000 a year in salary, but he also owns 62% of the company, or a $1.3 billion stake. That makes him the 320th richest person in the U.S., according to


researchers. Earnings are forecast to grow 25%-plus annually over the next two years, but the price/earnings multiple based on the next 12 months' earnings is just 8.5. That's top performance on the cheap, if the growth materializes as expected.

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David S. Kalt, optionsXpress Holdings

( OXPS). In 1999, as online trading was hitting a fever pitch, Kalt joined with two buddies to launch a brokerage that specialized in helping retail and institutional traders buy and sell options. The brokerage, called, survived the bear market and went public in January of 2005. Its share price was cut nearly in half over the next five months. But since last summer, investors have come to understand the growth potential of Kalt's vision and have bid the shares up by 100%.

He and his partners are impressively focused on growing the company to create value, not just for the sake of getting bigger. Witness the terrific return on invested capital, 40%, and net profit margins of 36.5%. Both are light-years ahead of the rest of the brokerage industry.

Earnings in 2007 and 2008 are expected to grow at a 30% clip, yet shares go for a price/earnings multiple of less than 26, and there is no long-term debt. Kalt earns an annual salary of $370,000 a year and owns 3.3 million shares worth $89 million at the current quote. So far, it looks like he is good for it.

Charles A. Ledsinger Jr., Choice Hotels

(CHH) - Get Choice Hotels International, Inc. Report

. This is not a stock to go out and buy today. You'll have to wait for a cooldown. But investors have to give Ledsinger a lot of credit for creating a motel-franchising powerhouse that has generated fantastic returns on capital since he was hired in 1998. All Choice does is sell its name and reservation system to independent business people who wish to own a Comfort Inn, Quality Inn, Clarion, Econo Lodge, Rodeway Inn or the like.

Earnings have grown at a rock-steady 15% pace for the past five years. There's no debt, and return on capital is a stunning 65%, more than 10 times better than the rest of the lodging industry. The price/earnings multiple is high, at 31 times 2006 earnings, but has been expanding for some time as investors have come to recognize the steadfast nature of the income and dividend stream, and to believe that both can continue for the foreseeable future.

Ledsinger earned $1.38 million a year in salary and exercised $4.13 million in options over the past year. Even if that is 300 times the salary of a maid at one of the inns, you have to conclude that he's been worth it. If shares edge down to $37 to $40 in a broad market selloff this year, snap them up and sleep easy.

James W. Christmas, KCS Energy

( KCS). This stock has proven to be a real gift to shareholders since 2000, starting its 3,400% advance well before energy prices started moving toward current levels.

Christmas has served as CEO since 1988, helping to engineer the natural-gas exploration and production outfit's remarkable record of finding and developing profitable properties in Michigan, California, Wyoming and the Gulf of Mexico. KCS currently has more than 330 billion cubic-feet equivalent in net proved reserves. The company increased its capital-expenditure budget to north of $260 million, and said it planned to drill 240 new wells in 2006, 25% more than last year.

Despite production growth north of 25% and earnings growth of 30% to 40%, KCS still trades at a forward price/earnings multiple of 8.9. That means the Street still hasn't warmed to the story. Thus underappreciated, there is a lot of headroom for future buyers to push the price up. Return on capital, at 22.5, is twice the industry average.

Shares could easily advance 30% again this year even if energy prices stay right where they are. Christmas took in $604,000 in salary last year and exercised $2.37 million in stock options. He's done the job for shareholders, so don't bug him about the paycheck.

Think about these kinds of chief executives next time the government announces a new plan to pull the rug out from under the profit motive. Hard-working leaders with long-term records of success should have the fruits of their efforts celebrated, not confiscated.

At the time of publication, Jon Markman did not own or control shares of companies mentioned by this column.

Jon D. Markman is editor of the independent investment newsletter The Daily Advantage. While Markman cannot provide personalized investment advice or recommendations, he appreciates your feedback;

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