Ministry of Education raises concerns over IIM Rohtak's Rs 3.2 CR variable pay to director: Report

The Ministry of Education (MoE) has formally expressed objections to the Indian Institute of Management (IIM), Rohtak, regarding a substantial variable pay of Rs 3.2 crore awarded to its director, Dheeraj Sharma, for the fiscal years 2018-19, 2019-20, and 2020-21, according to the Indian Express.

This issue comes in the wake of findings by the MoE's Internal Audit Wing (IAW), which was tasked to investigate complaints forwarded by President Droupadi Murmu, acting in her capacity as Visitor of all IIMs, on October 6, 2023.

The complaints highlighted several concerns, including variable pay, questionable issuance of mobile phones to faculty members, and various financial irregularities. The IAW report deemed the process used by IIM Rohtak to calculate Sharma's variable pay as "void," noting that the figure exceeded 200% of his total compensation package, a breach of "financial prudence."

In its findings, the IAW stated, “The propriety of any system allows variable pay to be a percentage of a person’s total emoluments,” emphasising that operational norms typically cap such bonuses to avoid arbitrary inflation of salaries. The MoE has since reached out to IIM Rohtak twice to request clarification on the methods used to determine the variable pay, and has demanded accountability from the decision-makers involved in the process. 

Directors at IIMs can earn variable pay contingent upon the fulfilment of specific performance metrics, which the institute's Board of Governors determines in alignment with the IIM Act. 

Despite being alerted to these matters, IIM Rohtak has maintained that the compensation provided to Sharma was in accordance with regulations and received unanimous approval from its Board of Governors, which reportedly met to discuss the variable pay and provide endorsement for the years in question before the enactment of certain regulations. 

In response to inquiries from The Indian Express regarding the investigation into Sharma’s compensation, the institute’s Board of Governors secretary denied any wrongdoing, stating that findings by the Comptroller and Auditor General (CAG) had discovered no irregularities. 

The IAW highlighted three key issues in its report, one being that the approvals for Sharma's variable pay occurred before the relevant regulations were officially adopted. Additionally, the IAW criticised the inflated financial metrics used to assess the institute's performance.