Published April 2, 2013, Los Angeles Daily Journal – When the heads of the Detroit automakers made their famous trip to Washington DC in 2008, arriving in private jets and asking to be bailed out from their financial woes, the world was shocked at their level of disconnect. Did they really just tell Congress that they were broke and about to go under, while their $50 million jets waited on the tarmac? Many Americans would relish the opportunity to be so unfortunate.

The arrogance of the event typified everything wrong with the system, and at the same time was rather predictable. Executive pay for Fortune 500 companies had been out of whack for years, with top brass reeling in rich compensation packages that had little to do company performance. And executive pay untethered to company results, officers had little reason to dwell on the risks associated with the deals they were making.

Consider the case of Kenneth Lewis, the former CEO of Bank of America, who raked in $140 million in compensation from 2001 to 2009, while his company slid into the financial abyss. Under Lewis’ watch, Bank of America was brought to near extinction, requiring a $45 billion U.S. bailout – the largest of any bank under the emergency program. Under mounting criticism, Lewis left in 2009, triggering an automatic severance payment. The amount: $135 million.

Economists have long agreed that executive compensation should be linked to both long term company performance and the average pay for the standard worker. Peter Drucker, one of the most influential modern-day thinkers on corporate governance, opined that CEO pay should be more than 20 times that of the average worker. The Economic Policy Institute noted that for most of the past century, CEO pay was directly in line with this, earning CEOs roughly 20 times as much as the average employee.

Yet according to a Businessweek study, in 2008 the average public company CEO received pay that was 400 times that of the average employee. What’s worse, much of the pay did not fall into the category of long-term, incentive-based compensation. Quick cash was the name of the game.

If the public was shocked in 2008 to learn just how out-of-line executive pay had become, it was downright outraged when bailout recipients continued to give their executives outlandish pay. In late 2008, for instance, Merrill Lynch paid out $3.6 billion in bonuses to its employees, even though Merrill’s performance would have put the firm out of business had it not been for the bailout. In the last three months of 2008 alone, the company reported losses of $21 billion.

To reign in executive pay for companies that received Troubled Asset Relief Program (TARP) funds, Congress placed strict limitations on executive compensation for TARP recipients. The Treasury Department created the Office of the Special Master for TARP Executive Compensation, which was charged with establishing pay packages for the 25 highest paid employees at companies whose receipt of TARP funds was considered “exceptional.”

In a Feb. 4, 2009, address to the nation, President Barack Obama brought clarity to what would be permitted: “Top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000 – a fraction of the salaries that have been reported recently. And if these executives receive any additional compensation, it will come in the form of stock that can’t be paid up until taxpayers are paid back for their assistance.”

Initially, the Special Master was responsible for the executive pay at seven companies. However, after five of the companies repaid their TARP debt, today the number stands at just two: General Motors and its sister company, Ally Financial (formerly General Motors Acceptance Corporation). So, are the salaries of the GM and Ally executives in line with the president’s promised salary cap? Not even close.

In a 2013 report released by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Inspector General found that the Special Master “did not establish meaningful criteria” for determining executive pay at its covered companies, and that it “could not effectively rein in excessive compensation.” The report blasted the Special Master for the lack of oversight, and lead to hearings before the U.S. House Oversight and Government Reform Committee.

Just how bad is it? Get ready to be sick. In 2012, nine of the 22 highest paid GM received cash pay that violated the president’s $500,000 pay cap, and all 22 executives received stock that vested immediately, not after the TARP funds are repaid. With the cash and stock combined, the GM salaries ranged from a low of $1,236,250 to a high of $9,000,000.

Ally’s 2012 pay plan was just as offensive. Six of its 21 highest paid executives received cash pay over $500,000, and as with GM, all 21 executives received stock that vested immediately. Ally’s salaries ranged from $1,934,667 to $9,500,000. Under the guiding economic principle that a CEO’s pay should be no more than 20 times that of the average worker, this would mean that the average Ally employee should be taking home $475,000 per year, which certainly is not the case.

It is unforgivable that the Special Master approved the same type of outlandish salaries that created the financial crisis in the first place, and it is shameful that GM and Ally requested them. As President Obama stated in his February 2009 address, our nation needs to stomp out this type of reckless behavior. “This is the height of irresponsibility. It’s shameful. And that’s exactly the kind of disregard of the costs and consequences of their actions that brought about this crisis.”

GM and Ally should take a page out of

playbook. Buffett, the self-made billionaire who built Berkshire Hathaway into one of the most profitable companies of our day, received an annual salary in 2008 (when other CEOs’ pay plans were skyrocketing) of $100,000 and a bonus of $75,000.

Buffet did allow himself one perk. In 1989, he purchased a corporate jet that he appropriately called “The Indefensible.” But in true Buffett style, he managed to turn even this into a success, parlaying the transaction into the purchase of NetJets – a company that has now become the largest private jet provider in the world.

Perhaps Saint Paul was right. The love of money is a root of all kinds of evil. We can only hope that corporate executives’ love of the quick buck won’t put us right back into a place of wondering how it all got so bad so quickly.