Investor warns Britain's top firms not to ignore pay revolts

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* Legal & General (LSE: LGEN.L - news) 's fund arm writes to FTSE 350 firms

* Issues series of guidelines for setting pay for bosses

* Comes as new PM sets sights on governance

By Simon Jessop and Carolyn Cohn

LONDON, Sept 16 (Reuters) - Britain's top companies need to cut bonuses in response to shareholder revolts against senior executives' pay, the fund arm of insurer Legal & General said in a letter to the top 350 firms.

Legal & General Investment Management (LGIM) manages 853 billion pounds ($1.13 trillion) in assets and is one of the leading investors in most UK companies due to its many index-tracking products.

After a number of companies including BP and Smith & Nephew faced a revolt from shareholders over pay this year, LGIM said boards should consider the wider impact of executive pay, such as the general workforce, public perception, the economic climate and government bodies.

Any large voting opposition to pay proposals - greater than 20 percent - "should not be ignored", LGIM said.

LGIM said it would "encourage" firms to reduce short-term annual bonuses, with those in the region of 200 percent of salary reserved only for the largest global companies.

Growing investor anger at excessive pay packages led to the government giving shareholders a binding vote on a firm's three-year pay policy in 2013. LGIM timed its letter to influence firms as they plan new policies to run from 2017.

Ratcheting up the pressure, new Prime Minister Teresa May has said she plans to overhaul governance rules.

Data from the Office for National Statistics released this week showed a record 44.3 billion pounds was handed out in bonuses in the last financial year, beating the pre-financial crisis peak, led by payouts to bosses at non-financial firms.

($1 = 0.7574 pounds) (Editing by Elaine Hardcastle)