I think this is always the correct policy, giving a wage increase and then adding some time to the length of the existing contract (win win). The philosophy is to reward the player for current progress, and at the same time show other players (especially youth) that a contract will be improved upon if you perform (rather than looking for a transfer, e.g. Sterling, who’s contract improvement was mishandled apparently). You can look at it from the point of view of an employee, imagine performing at such a high level that your company is more profitable, yet having to work at your current wage till your new raise (maybe a year away?). Not very motivating imo, especially when you see others reap the benefit of your hard work over the previous year.
The flip side is someone like Woodburn, who was given a improved contract when he started performing, and now won’t be given an improved contract as he has really shat the bed since (hit his ceiling or maybe too many injuries, at the end of the day not his fault).