I don't necessarily buy into the "lame duck" theory. If he's able to elevate the team further in his 3rd year and they're satisfied with the overall job he's doing, then they can sign him again, after the initial contract agreement has finished. You can say the 4th year of the contract "doesn't really exist",... but the the 3rd year does exist.
I don't automatically believe that not extending him now will detract from how he's able to coach or that the players would respond any different to him.
I'm not suggesting pushing him out the door at this point. I am suggesting keeping options open for the future after next season, within a contract that was agreed upon.
How many years are you willing to give him, if they're not able to become a contender or a even a 2nd round playoff team? Obviously it depends on circumstances, but if he posts winning regular season records, will that always be enough? For me, the prior history of the franchise should not factor into how the current GM operates and evaluates things.
Whether you buy into it or not, it exists.
If he's a lame duck coach, he's coaching to save his job, not necessarily to continue to make the team better. Those don't always perfectly align.
Every coach with a lame duck contract technically has their "future options open" by definition. You don't want to have a good coach go into their last season wondering if they have a job because they will definitely find one elsewhere instead.
For me, if he has a good rapport with the FO and players and the team is showing improvement, I'd be hesitant to let him go. Remember Mike Malone?
And yes, I do consider past team performance in this decision. What do you think will happen if we fire Brown and replace him with another Walton, or whoever? How long do you think fans will be around when you royally screwed the pooch on keeping a good coach that has the team competing for the PO when you yet again replace him with who knows what??? Unless you absolutely have something better in hand, you don't get rid of the good on speculation. Ever hear about throwing out the baby with the bathwater?
You never answered who we could reasonably bring in that's better (especially that might be cheaper).
He could still get fired after next season if it implodes, contract or not. All that matters is how much Monopoly money the team would pay him if they did extend his contract. That doesn't stop you from changing coaches later if you want.