According to a league source, Williams technically signed a contract extension that adds two years to his deal and runs through 2017. But the extension was for accounting purposes only and the final two years automatically void if Williams is on the roster on the fourth day of the 2016 league year (which typically starts in March).
Williams' restructured deal was earlier reported by Yahoo! Sports.
More importantly, the restructuring frees up $3.2 million in salary-cap space for this year. The Panthers dropped Williams' cap figure from $8.2 million to $5 million by cutting his base salary from $4.75 million to $850,000. However, Williams was handed a $4 million signing bonus when he signed the restructured deal.
The Panthers also lowered Williams' future salary-cap hits. They dropped his 2014 cap figure from $9.2 million to $6 million by cutting his base salary from $5.75 million to $1.85 million. Williams' 2015 cap figure has dropped from $10.2 million to $6.33 million. His scheduled $6.75 million base salary for 2015 has dropped to $1.85 million.
Williams, 30, also is scheduled to earn a $1 million option bonus in 2015 and also can earn up to $750,000 in incentives that year.
Williams' name often had come up in trade speculation in recent months because the Panthers have a crowded backfield and a tight salary-cap situation. But his restructured contract makes it possible for Williams to stay and share the backfield with Jonathan Stewart and Mike Tolbert.
After struggling most of last season, Williams finished as the team's second-leading rusher behind Cam Newton with 737 yards on 173 carries and five touchdowns. He also caught 13 passes for 187 yards and two scores.
He closed the season by setting a franchise record with a career-best 210 yards rushing and two touchdowns in Carolina's 44-38 win over the New Orleans Saints.
With the restructured deal, the Panthers now are $8.4 million under the cap.
Information from The Associated Press was used in this report.