The CEO's job is to make the company valuable. That's kind of a sociopathic view, of course (gee, I thought our job was to make heart valve replacements or whatever). But, that is the trade off you make when you go public. And, just in case it isn't clear, stock price + dividends over time should equal the cash flow generated by the company. So, looking at stock price over a ten year period is a decent proxy for evaluating a CEO's performance.
Only decent, and only proxy. Say you worked the first 5 years propping up a dying business, and the next 5 years building a bunch of incredible value. The stock market may not have reacted to that, but your company is set to explode in value. Or you may have started in a bubble, or finished in a bubble, or...
So of course it is not the only measure, but it is certainly an extremely large part of measuring a CEO, since it is his job to maintain and/or grow the value of the company. It will never tell you if the company is bettering humanity, good to its employees, or other very worthwhile measures.
The CEO's job is to make money (profits) for shareholders. Manipulating the stock price is not part of the job and is probably illegal. Besides, the OP failed to account for the dividends Microsoft paid during Steve Balmers tenure as CEO.
Stock price is his comparison. His point, is that, Balmer let apple and facebook overtake Microsoft when the market was equally fertile for any company to explode. But what did the aftermath look like for Microsoft? Positive enough to adjust for inflation -- an equal stock price.
It's not, but it's one of the best financial measures (as opposed to revenue, for example).
I would argue that by other measures, Microsoft under Ballmer has not seen improvement either. These might include market power (the power to dictate future market directions), product sales share, product mind share, cultural association, recruiting, innovation, etc.
That said, I think there are a few areas where Microsoft has seen improvement under Ballmer. Xbox went from a "what? really?" product, to the clear console leader. And Microsoft government affairs is miles ahead of where it was under Bill Gates--from its own federal conviction, to instigating multiple actions against competitors.