Individuals only report income as it received and only deduct expenses as they are paid.
This cash basis reporting means that there is not a loss for income items that are not received.
For example, a landlord does not report the rent that is due but only the rent collected. So, there is not a deduction or loss for rent not collected; but the rental income that is reported is the rent actually collected.
In the same way, the salary received is all that will be reported and there is not a loss for salary not received and that was not reported as income.
Compensation that is paid in property is to be included in income. The current value of the rights granted in lieu of salary is included as salary income subject to income tax.
If there is no current value of the property then this is nonqualified deferred compensation.
These rules are a bit complicated and are explained at http://www.irs.gov/businesses/corporations/article/0,,id=134878,00.html
"Under the economic benefit doctrine, if an individual receives any economic or financial benefit or property as compensation for services, the value of the benefit or property is currently includible in the individual's gross income. More specifically, the doctrine requires an employee to include in current gross income, the value of assets that have been unconditionally and irrevocably transferred as compensation into a fund for the employee's sole benefit, if the employee has a nonforfeitable interest in the fund."
Technically the settlement is taxable in the current year and the value of the rights will be included as part of W-2 income if the property is either transferable or not subject to a substantial risk of forfeiture. In that case, the employer is required to include the value of the property in salary and to pay employment taxes in the same manner as a cash payment.
Practically there may be little or no value of these rights, as described.
Please ask if you need clarification.