BHP begins to face a company crisis as threats of call for leadership change begin to arise. Due to a steady decline in the price of stock, the company is facing some serious issues and must look towards reform.
The prices have dipped to as low as $18.77 as of Friday, November 27. The share prices have fallen a drastic 43 per cent since the peak in the third quarter of 2011. Since the middle of 2014, they have fallen nearly 44 per cent, double that of Rio Tinto.
In 2011, BHP spent twenty billion dollars on shale leases in the United State. The followin year, Saudi Arabia retorted the rapidly rising US production of shale by increasing its own production to drive the price of oil down. The fall in stock prices is partially due to the oil price being cut nearly in half by Saudi production, as well as a massive increase in shale production in the United States. However, the recent decline in stock price is credited also to two other issues: uncertainty of the final cost of a disaster with the Samarco dam earlier this year, and BHP refusing to adhere to their “progressive dividend” policy if it could mean risking their A grade credit rating.
As of now, only half of the non-executive directors of BHP were in place before 2010. Barness Shriti Vadera joined in 2011, as well as Lindsay Maxsted. In 2012, Pat Davies joined the board. Malcolm Brinded joined last year, and Anita Frew this year. Perhaps this change of leadership will lead to a brighter future for BHP Billiton and hopefully an eventually rise in stock prices.
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