TSB Bank plans to grant all 8,600 of its staff £100 of shares and make them 'TSB Partners' as part of the firm's planned £1.5bn stock market flotation.
"I believe a sense of shared ownership amongst TSB staff is key to delivering a consistently great customer service – and to building a thriving TSB Bank," said Paul Pester, chief executive officer of TSB.
The firm's owner, Lloyds Banking Group, is aiming to launch an initial-public-offering of TSB, worth 25% of its stake, by the end of June.
The sell-off is a condition of the UK government's £20bn ($33.5bn, €24.6bn) bailout of Lloyds at the peak of the financial crisis in 2008.
TSB, which has more than 630 branches across England, Wales and Scotland, also announced a new reward strategy.
The firm explained it intends to implement the plan after its IPO.
The bank's new reward strategy will enable TSB to comply with the 1:1 fixed:variable remuneration cap prescribed by the Prudential Regulation Authority (PRA) and the European Union (EU).
The lender aims to achieve this by re-balancing fixed and variable reward for senior executives by replacing its Annual Bonus and Long Term Incentive Plan (LTIP) awards, currently received by TSB senior executives, with the TSB Award and TSB Sustainable Performance Award (SPA).
TSB also pledged to re-balance executive remuneration away from variable reward and towards fixed reward.
The reward structure will apply to Pester and chief financial officer, Darren Pope, from the completion of TSB's IPO, and be introduced for the Bank Executive Committee later in 2014.
TSB explained Pester's base salary will increase from £600,000 to £700,000 per year, frozen until 2016.
Even after accounting for this increase, the firm stressed he will see a material reduction in his maximum potential earnings.
Pester's fixed annual reward, comprising base salary, pension and other benefits will total £877,500.
Under the new TSB policy, the CEO's variable reward will be £507,500 for on-target performance or a maximum of £805,000 for outstanding performance.
Combining these variable rewards with his fixed pay gives an on-target total of up to £1.3m and maximum reward of £1.6m per annum.