I know it sounds ludicrous, but investors often overlook the people in charge of protecting their investments. The idea of gauging a company's leadership plays second-fiddle to other categories of analysis. However, at Fool.com we believe careful study of effective leadership is one of the most important areas of evaluating long-term winning investments.

We like CEOs who actually work for shareholders like us. After all, we're the true owners of the business. When you're deciding whether to invest in a company, failing to vet its CEO is a big mistake. In fact, if you've overlooked the study of a company's leadership, then that's the one important area you should know about before finalizing your investment in the company.

After reviewing thousands of companies over dozens of years, we've found several crucial characteristics of quality management. Today, we'll size up the recent performance of Altria Group's (NYSE: MO) leadership.

How much skin do they have in the game?
Are Altria Group CEO Michael Szymanczyk's interests aligned with shareholders? Here's how the Altria Group CEO's ownership compares to that of other companies in the industry.

CEO, Company

Shares Owned

% of Shares Outstanding

Insider Ownership Market Value (in millions)

Michael Szymanczyk, Altria Group

1,152,903

0.06%

$26

Louis Camilleri, Philip Morris International

1,279,263

0.07%

$66

Susan Ivey, Reynolds American

438,388

0.15%

$25

Martin Orlowsky, Lorillard

80,783

0.05%

$6

Source: Capital IQ, a division of Standard & Poor's. Shares are common stock equivalents only and do not include options, awards, and other forms of compensation.

Szymanczyk actually owns $26 million worth of Altria Group, or 0.06% of shares outstanding. We Fools prefer CEOs who have higher ownership stakes in their businesses, since that better aligns their interests with shareholders'. However, while we think high insider ownership is a good sign, low insider ownership isn't necessarily a bad one. CEOs may be relatively new, or may have a low percent of shares outstanding, but a high total value of ownership.

How well are they using your money?
Return on equity can help investors determine how adeptly management gets the job done. This metric combines how well management is expanding profitability, managing assets, and using financial leverage, all in one ratio. While return on equity isn't foolproof -- managers can manipulate it with excessive leverage, for example -- it does an excellent job of suggesting how effective managers are, and how well they can generate high returns on investors' capital.

Despite difficult economic conditions, Altria Group managed to grow return on equity beyond its five-year average. In most cases, consistently increasing return on equity suggests that management is either adept at cutting costs and managing assets, or is moving the company into new high-return areas. In Altria Group's case, the equity on its balance sheet dropped drastically after spinning off Philip Morris International (NYSE: PM) and Kraft, which has allowed soaring recent return on equity. Because of that low base, return on equity sits at around 90%, so investors are better off judging management on net income or other areas.

How productive are their workers?
Revenue per employee provides another way to gauge a CEO's effectiveness. If this metric is declining, the company might have a bloated organizational structure, or too many extra employees toiling away at new initiatives that just aren't working out. Either possibility would hint that management isn't effectively running the organization.

Altria Group's revenue per employee has moved above its five-year average. Rising revenue per employee can suggest that management's getting better at controlling costs, or encouraging more productivity from its workers. To better see whether Altria Group's management is excelling in this area, let's compare the company to its peer group once again: 

Company

2005

2007

2009

Last Year's Revenue Per Employee vs. 5-Year Average

Altria Group

$175

$181

$1,682

130%

Philip Morris International

N/A

$302

$324

N/A

Reynolds American (NYSE: RAI)

$1,019

$1,253

$1,300

8%

Lorillard (NYSE: LO)

N/A

$1,172

$1,365

N/A

Source: Capital IQ, a division of Standard & Poor's. Dollar figures in thousands.

Altria Group's revenue per employee isn't just rising -- it's better than its combined peer group. Although, management can't take all the credit for this. Altria used to have both Kraft and international operations under its umbrella as well. Today's company requires far fewer employees. Still, revenue per employee is above competitors Reynolds American and Lorillard.

These are just a few of the factors we look for in a company's management. If you can find leaders who continually give shareholders high returns on their capital, and align their interests with yours, you've got a better chance to enjoy market-beating returns for the long haul.

Jeremy Phillips, VP of Fool.com, owns no shares of any companies listed above. Philip Morris International is a Motley Fool Global Gains recommendation. The Fool owns shares of Altria Group. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.