It has little to do with earning it. Our club doesn't operate that way. If it did, Marchisio would have been here and Del Piero would have retired with us in 2014 or something.
If we sell Mandzukic, we will need a new striker. No club in the world will start a season with a 19 year old striker, even if the next closest thing to a striker is Cristiano Ronaldo. The market probably doesn't offer a free agent like Llorente to sub Mandzukic, and even if it did, why should we replace Mandzukic with an inferior player? It's more probable that if we decide to sell Mandzukic this summer, we will have to spend a lot on a new striker, which will surely stop us from investing big in other positions.
Anyway, what we're offering is 1 additional year to his contract, just to make Mandzukic feel secure and motivated in 2019/20. If next year we decide it's time to invest in a top striker, then Mandzukic will probably leave one year before his contract expires.