CAG recommends uniform and fiscally prudent framework for variable pay to IIM directors

The Comptroller and Auditor General (CAG) has criticized the payment of Rs 3.2 crore in variable pay to the director of IIM Rohtak, Dheeraj Sharma, alleging procedural and regulatory irregularities. The CAG recommended that the Ministry of Education establish a uniform, transparent and fiscally prudent framework for such payments to IIM directors.

The IIM Act, 2017, entitles directors to variable pay based on performance objectives specified in regulations, which the board is empowered to frame, including performance objectives for variable pay. IIM Rohtak's regulations, effective since October 2021, stipulate the development and communication of a performance matrix for the director, who must recuse himself from matters involving conflicts of interest.

However, the CAG pointed out that the payment covered three years—2018-19, 2019-20 and 2020-21—despite the regulations becoming effective only in October 2021, constituting a retrospective application. The audit report highlighted several procedural deficiencies in the approval process, including deliberations on variable pay during meetings not on the pre-approved agenda and during times when the board was not constituted as per the IIM Act.

The Ministry concurred with the audit observations, stating that the variable pay payment was not supported by regulatory provisions and proper documentation, and that the amount should be recovered.