Proxy Battle Heats Up: Paragon Technologies Faces Sham Gad's Board Challenge

In the high-stakes world of corporate governance, few battles rival the drama unfolding at Paragon Technologies (OTC: PGNT). The company’s board is locked in a fierce proxy war with former CEO Sham Gad, whose nomination of a dissident slate for the 2025 Annual Meeting has exposed deep-seated conflicts over leadership, ethics, and financial stewardship. Let’s dissect the competing narratives shaping this critical shareholder showdown.

Paragon’s Case Against Sham Gad: A Pattern of Deceit

Paragon’s Audit Committee has painted Sham Gad as a serial offender of fiduciary duty, citing decades of alleged misconduct. Key charges include:
- Citizenship Deception: Gad falsely claimed U.S. citizenship on multiple applications, including a 1994 Georgia driver’s license and college admissions, invoking the Fifth Amendment in a 2012 court case.
- Work Authorization Omission: As CEO, he concealed his status as an Egyptian citizen without valid U.S. work authorization, misclassifying himself as an independent contractor to avoid tax reporting.
- Financial Misconduct: Over $82,000 in unauthorized corporate expenses for MLS season tickets were incurred between 2022–2024, with only a partial reimbursement after his termination.

The board terminated Gad “for cause” in November 2024, citing his continued activism against other companies (e.g., Ocean Power Technologies) using Paragon’s resources. Paragon further accuses Gad of wasting millions on “absurd activism,” including a $500,000 failed bid to secure a Rubicon Technology board seat and $3 million in legal fees for a proxy fight at Ocean Power.

Sham Gad’s Counterattack: Growth vs. Governance

Gad counters these claims, framing himself as a shareholder-aligned leader whose tenure delivered measurable financial success:
- Equity Growth: From $2.8M to $22M (20.4% CAGR), excluding “non-economic gains.”
- Stock Performance: A 33.5% CAGR in share price, rising from $1.20 to $9.00.

However, Paragon disputes these metrics, arguing they omit critical context. For example:
- Truncated Timelines: Gad’s claims exclude his full 12.35-year tenure as Chairman, during which Paragon reported $2M in losses (2013–2016).
- Distorted CAGRs: Actual equity growth was 11.3%, versus Gad’s 20.4% claim, and stock performance under his full leadership trailed the NASDAQ (7.7% vs. 14.6%).

The Proxy War: A Choice Between Accountability and Ambition

The 2025 Annual Meeting pits two visions against each other:
- Paragon’s Slate: Emphasizes reform, transparency, and accountability. The board’s nominees include experienced executives like David Duquette (Littoral Power Systems CEO) and Ronell Rivera (Paragon’s SED International President).
- Gad’s Slate: Positions itself as a return to “aggressive growth,” though his nominees include controversial figures like Jim Kaufman (Reliant Mission CFO) and Elodie Leoni (Professional Association of Diving Instructors).

Legal and Governance Battles: The Elephant in the Room

Gad’s Delaware lawsuit against Paragon’s bylaw amendments—which he claims entrench current directors—adds further complexity. While Paragon recently repealed these amendments to avoid legal risks, the case underscores broader governance concerns. Gad also accuses current Chair Sam Weiser of misusing shareholder funds to retain power, noting Weiser’s lack of personal stock ownership and equity sales.

Conclusion: A Fork in the Road for Shareholders

The outcome hinges on which narrative shareholders prioritize: Paragon’s emphasis on accountability and fiscal discipline or Gad’s claims of growth-driven leadership. Key data points favor Paragon’s stance:
- Misconduct Costs: Over $3.5M wasted on activism and legal fees under Gad’s leadership.
- Financial Reality: Actual equity CAGR of 11.3% versus Gad’s inflated 20.4%.
- Ethical Risks: Gad’s unresolved legal issues and documented breaches of trust.

Investors should also note that Paragon’s board has already shown flexibility by repealing contested bylaws, signaling a commitment to shareholder engagement. Conversely, Gad’s reliance on outdated metrics and unresolved legal baggage raises red flags about his governance credibility.

As the June 30 proxy deadline approaches, shareholders must decide whether to back a path of accountability (via the WHITE proxy card) or gamble on a leader whose legacy is as contentious as his ambitions. The stakes—both for Paragon’s future and its shareholders’ returns—are impossibly high.