(Reuters) - Hewlett-Packard Co is shaking up a board criticized by many as dysfunctional, bringing in five new directors including former eBay chief Meg Whitman, as new CEO Leo Apotheker remakes the company.
HP's board had for years come under fire from shareholders and business leaders such as Oracle's Larry Ellison, most recently after it forced out Mark Hurd as CEO in controversial fashion.
The new directors will bring fresh thinking to the world's largest technology company by revenue, including much-needed expertise in areas such as telecommunications and international experience, the company said.
In addition to Whitman, HP named as directors Shumeet Banerji, CEO of Booz & Co; Gary Reiner, former chief information officer of General Electric Co; Patricia Russo, former CEO of Alcatel-Lucent; and Dominique Senequier, CEO of AXA Private Equity.
The technology giant said directors Joel Hyatt, John Joyce, Robert Ryan and Lucille Salhany will not stand for reelection by shareholders.
"This change was two things -- the handling of the Mark Hurd situation, which was very controversial, and that with a new CEO it makes sense to have someone new," said Kaufman Bros analyst Shaw Wu.
Hurd was accused last June of sexual harassment by a female contractor, but a board investigation found no evidence to back that up. Hurd resigned August 6 after the board said he filed inaccurate expense reports to conceal a "close personal relationship" with that contractor, something Hurd's representatives have disputed.
The four directors leaving are doing so voluntarily, HP said. Hyatt and Joyce have been directors since 2007, Ryan since 2004, and Salhany since 2002. The changes leave HP with 13 board members.
According to a source familiar with the matter, Salhany and Ryan pushed hard for Hurd's ouster from the outset. Hyatt and Joyce were more supportive of Hurd at first but eventually went along with the unanimous decision to seek his resignation.
Whitman is arguably the best-known of HP's new directors. At eBay, she oversaw a period of robust growth but was criticized for her acquisition of Web telephone company Skype. She recently lost out in a bid to become governor of California.
"With Leo coming in as CEO, we both thought it was appropriate to look at the board," HP Chairman Ray Lane said in an interview.
Lane said Russo will bring a strong track record in the telecommunications industry, called Reiner an "iconic CIO," and lauded Banerji's and Senequier's international experience.
Gleacher & Co analyst Brian Marshall said investors should welcome the move.
"To shake it up a little bit and get some of the old-school guys out of there and get some new-school blood in there, highlighted by Meg Whitman, this is a positive development," he said.
Apotheker, the former CEO of SAP AG, took over as chief of HP in November and analysts are widely expecting to see more changes at the company. Chief Marketing Officer Michael Mendenhall recently left HP, and Apotheker brought in SAP veteran Bill Wohl as chief communications officer.
In an interview, Apotheker made it clear that he had no plans to stand pat.
"You'll see that HP will be driving a lot of changes across its entire business," he said.
HP's board has seen major turnover and been harshly criticized over the years for controversies such as the hiring and firing of CEO Carly Fiorina, the 2002 acquisition of Compaq, and -- most infamously -- the so-called "pretexting" spy scandal in 2006.
Hurd's departure in August stunned investors and sent shares tumbling 8 percent in the first trading day after the announcement.
In the wake of Hurd's exit, HP's board was lambasted by Ellison, who hired Hurd as co-president a month after. Ellison called the board "cowardly."
IBM CEO Sam Palmisano also chided HP's board for its handling of Hurd's departure.
Shares of Palo Alto, California-based HP were down 16 cents at $46.60 following announcement of the board changes, which came after the stock closed down 0.9 percent at $46.78 on the New York Stock Exchange.
(Reporting by Gabriel Madway; Editing by Steve Orlofsky, Gary Hill)