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* Legal & General'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 tocut bonuses in response to shareholder revolts against seniorexecutives' pay, the fund arm of insurer Legal & General said in a letter to the top 350 firms.
Legal & General Investment Management (LGIM) manages 853billion pounds ($1.13 trillion) in assets and is one of theleading investors in most UK companies due to its manyindex-tracking products.
After a number of companies including BP and Smith &Nephew faced a revolt from shareholders over pay thisyear, LGIM said boards should consider the wider impact ofexecutive pay, such as the general workforce, public perception,the economic climate and government bodies.
Any large voting opposition to pay proposals - greater than20 percent - "should not be ignored", LGIM said.
LGIM said it would "encourage" firms to reduce short-termannual bonuses, with those in the region of 200 percent ofsalary reserved only for the largest global companies.
Growing investor anger at excessive pay packages led to thegovernment giving shareholders a binding vote on a firm'sthree-year pay policy in 2013. LGIM timed its letter toinfluence firms as they plan new policies to run from 2017.
Ratcheting up the pressure, new Prime Minister Teresa Mayhas said she plans to overhaul governance rules.
Data from the Office for National Statistics released thisweek showed a record 44.3 billion pounds was handed out inbonuses in the last financial year, beating the pre-financialcrisis peak, led by payouts to bosses at non-financialfirms.
($1 = 0.7574 pounds) (Editing by Elaine Hardcastle)
Legal & General (LGEN)
