CEOs to Face Berkshire-Loyalty Test

Although it isn’t unprecedented for Mr. Buffett to replace top executives, they typically leave only when they retire. Mr. Buffett, who declined to comment, has said that no manager of a significant Berkshire business has left voluntarily to join a competitor.

There has been more churn than usual at the subsidiaries lately. Last week, paint company Benjamin Moore named retail-industry veteran Michael Searles as CEO, the third person to occupy the post in two years.

Jewelry retailer Borsheims also named a new CEO last week after Susan Jacques, who had led the company since 1994, left for the top position at the Gemological Institute of America, a nonprofit.

“He’s got very good people running the companies, and several down the line,” said Cliff Gallant, an analyst with Nomura. But “retention is a risk factor. When he moves on, I’m concerned that some of them will move on.”

At a May gathering of Berkshire CEOs with Mr. Buffett ahead of the company’s annual meeting, some managers asked him what their responsibility was after he was no longer at the company, according to people present.

Mr. Buffett encouraged them to preserve Berkshire’s culture of autonomy, one person said.

People familiar with Mr. Buffett’s thinking said the investor believes that Berkshire managers are loyal to the company and not to him personally. Still, he has acknowledged that despite his efforts to preserve Berkshire’s culture for the future, things will change.