Adds stock price in paragraph 4, Harley statement in paragraph 7

April 16 (Reuters) - Investment firm H Partners has urged Harley-Davidson's HOG.N shareholders to remove three directors from the board, including its CEO, holding them responsible for the company's declining sales and falling stock price.

H Partners, the iconic American brand's second-largest investor with a 9.1% stake, made the latest move days after the firm called on CEO Jochen Zeitz to step aside immediately.

Zeitz, who became the CEO in 2020, is expected to retire this year but has said he would stay until a replacement was found.

Shares of Harley, valued at $2.7 billion, have dropped 45% over the past year and 43% since April 2022 as the company struggles to appeal to new generations of riders. On Wednesday when much of the market was in the red, Harley rose 1.25% to $21.88.

The investment firm intends to run a withhold-the-vote campaign to push out Zeitz, who has served as a director for 18 years, Norman Thomas Linebarger, who has been a director for 17 years, and Sara Levinson, a board member for 29 years, according to a letter released on Tuesday.

"We believe Mr. Zeitz, Mr. Linebarger, and Ms. Levinson should be held accountable for the destruction of shareholder value," H Partners said in a statement.

In response, Harley said H Partners is putting its own interests ahead of those of other shareholders by disrupting the CEO transition process, creating uncertainty and "putting Harley-Davidson's future and shareholder value at risk."

H Partners' Jared Dourdeville resigned from Harley's board last week, citing the company's "cultural depletion" due to the departure of senior leaders and its remote working policies.

Harley's board consists of eight members and the company is scheduled to hold its annual meeting on May 14.

Five years ago at the start of the COVID-19 pandemic, Harley faced a boardroom challenge from another investment firm, Impala Asset Management, but quickly settled that fight amid the uncertainty of the health crisis.

(Reporting by Svea Herbst-Bayliss in New York, Abhinav Parmar and Nilutpal Timsina in Bengaluru; Editing by Stephen Coates, Sriraj Kalluvila and Richard Chang)

((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters Messaging: svea.herbst.thomsonreuters.com@reuters.net))