[ by Melanie Gretchen ] Royal Bank of Scotland CEO Stephen Hester is a sight of wonder.  Amid efforts by U.K. Prime Minister David Cameron to reduce bonuses for bank executives - especially those employed by a bank that's 82%-owned by the government, accepted a bonus of £963,000, the equivalent of $1.5 million - about half of what he received for 2010. So what can we expect from Mr. Hester? In the last 12 months, RBS announced that thousands of jobs would be cut in the investment banking division, one element of the CEO's strategy to reduce the bank's operations.   Yet, in the last year, the company's share price has fallen almost 38%, and traded in a wide range of $5.36 to $15.83. Mr. Hester's pay is tied to "the recovery of RBS, which he was recruited to turn around, having played no part in its collapse," bank Chairman Philip Hampton said (in defense of his CEO.  The Prime Minister contrasting that position, saying last week that, rather than leading the way with bonuses, RBS should be offering the least. Capping cash bonuses. The British government adopted one measure in its efforts to introduce some degree of normalcy to the situation, when it limited cash bonuses to $3,649 (£2,000) at both RBS and Lloyds Banking Group, the latter being 41%-owned by the government. Say on Pay. Toward giving shareholders more powers over executive pay, the country's business secretary, Vince Cable, presented 4 proposals to change corporate pay practices to make compensation more transparent. In addition to the "say on pay" plan, he recommended to Parliament that companies publish a single pay figure for top executives and reconsider the makeup of compensation committees.  "Clawback" mechanisms would allow companies to recoup bonuses if top execs failed to meet their respective (performance) targets. For now, Mr. Hester should be pleased with his bonus - $1.5 million is not too shabby.  Bottom's up. [Dealbook, 1/26/12]