Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett, whose list of potential successors shrank in March with the resignation of David Sokol, said the top choice has the integrity the job requires.

“The leading candidate right now, I would lay a lot of money on him being straight as an arrow,” Buffett, 80, told shareholders Saturday at Berkshire’s annual meeting.

Buffett is sizing up executives at Berkshire’s more than 70 subsidiaries in search of a successor. Sokol, 54, was considered by Buffett biographer Andrew Kilpatrick as the top candidate before stepping down amid disclosures about his stock dealings. Omaha, Nebraska-based Berkshire said in February that it had four candidates, without identifying them.

“Investors are very worried about succession and justifiably so, and the situation gets more urgent with every year,” said Jill Fisch, a professor at the University of Pennsylvania Law School who has written about corporate governance. “In terms of future uncertainty, that’s the biggest risk for Berkshire Hathaway.”

Buffett’s eventual replacements will take charge of a $200 billion company whose composition and culture are largely the expression of just one person. The CEOs of each operating unit, from Fruit of the Loom to Dairy Queen to Geico, were vetted by Buffett before acquisitions and promotions.

Buffett, who is also chairman, relied on Sokol for more than a decade as a dealmaker and manager, broadening the executive’s responsibilities to stretch across Berkshire’s energy, construction and luxury travel businesses. Buffett announced the manager’s resignation on March 30 and disclosed that Sokol had helped Berkshire negotiate a takeover of Lubrizol Corp. this year while buying stock in the company.

‘Succession Risk’

“CEO succession risk is elevated in our view in light of David Sokol’s recent departure,” Jay Gelb, an analyst with Barclays Plc, said in an April 20 research note.

Both the “quality of the person” as well as “managerial skills” are part of Buffett’s criteria for the next Berkshire CEO, he said Saturday at the annual shareholder’s meeting.

“It’s vital that you have someone at Berkshire that is running the place who cares more about Berkshire than he cares about himself,” he said. “We have multiple candidates that fulfill that, and the idea of an independent chairman is part of the belt and suspenders.”

Buffett refers to the CEOs of Berkshire’s units as “the All-Stars” and singles out a handful each year for public praise. Reinsurance head Ajit Jain, railroad CEO Matthew Rose, energy executive Gregory Abel and Sokol were lauded in Buffett’s annual letter to investors in February.

Ajit Jain

Buffett said March 22 that Jain, 59, is qualified to be CEO. Jain, who was born in India, joined Berkshire more than two decades ago. He runs a reinsurance business that specializes in large risks and collects the premiums that have provided funding for Buffett’s investments.

“He loves what he does, he’s not looking to take my job,” Buffett said at a news conference in Bangalore. “If he was, the board of directors would probably put him in there in a minute.”

Berkshire’s board includes Bill Gates, co-founder of Microsoft Corp., Susan Decker, former Yahoo! Inc. president, and Comcast Corp. Executive Vice President Stephen Burke.

“I’ve got a commitment to stay involved with Berkshire as a lifelong thing,” Gates said in a 2009 interview with Bloomberg Television. “We always have to think about what might happen and make sure Berkshire is not just great now, but forever.” Buffett has pledged most of his Berkshire shares to Gates’s charitable foundation.

Rose, Abel

Buffett acquires managerial talent by takeover. He targets well-run companies and entices CEOs into selling their firms by promising to leave management in place. Rose, 52, joined Omaha- based Berkshire last year in the $26.5 billion acquisition of Burlington Northern Santa Fe. Sokol and Abel, 48, arrived in 2000 when they sold MidAmerican Energy Holdings to Berkshire.

Buffett’s responsibilities will be split, upon his death or retirement, among at least three people. A CEO will oversee the operating units and one or more investment managers will take charge of the portfolio. Buffett affirmed Saturday that his son Howard will probably assume the position of non-executive chairman and has “no designs” on taking over.

Todd Combs

Berkshire’s next CEO will be handed oversight of a firm with more than $100 billion in invested assets and operating subsidiaries in industries that include energy and railroads as well as insurance and consumer goods. Todd Combs, a former hedge fund manager, was hired last year and given responsibility for $1 billion to $3 billion.

Sokol purchased stock in Lubrizol Corp. after initiating takeover talks on behalf of Berkshire for the engine-additives maker. The stock purchases in January may have given Sokol a profit of about $3 million, according to disclosures by Buffett and data compiled by Bloomberg. The trades violated the company’s insider-trading policies, Buffett said Saturday.

Sokol “would not, and did not, trade improperly, nor did he violate any fair reading of the Berkshire Hathaway policies,” according to a statement from William Levine, a lawyer for Sokol at Dickstein Shapiro LLP in Washington.

Berkshire managers praised by Buffett also include Geico CEO Tony Nicely, Grady Rosier, who heads the McLane food- distribution business, and Vic Mancinelli, who leads CTB Inc., a farm-products business.