Morgan Stanley said in a strategic update that it plans to pay 39 percent or less of revenue from institutional securiites to those employees in a flat revenue environment. That compares to a prior target, outlined by Chief Executive James Gorman in June, of 40 percent or less, depending on revenue.

"Most important, it's 39 percent in a flat revenue environment as distinct from previously looking for more revenue," Porat in an interview. "That means there's operating leverage: a lower compensation ratio in a higher revenue environment."

She also said Morgan Stanley had a "very challenging" fourth quarter in commodities because of the decline in oil prices.

(Reporting by Lauren Tara LaCapra; Editing by Chizu Nomiyama)