WWE's contracts are for "downside guarantees" so if you never work a match, never sell a piece of merch, sit at home doing nothing, this is your guaranteed income. When you add in House Show pay, PPV bonuses, Merchandise etc, that can increase it multiple fold.
I remember hearing that only Hunter & Cena had $1 million downside gurantees. In Cena's case it wouldnt matter because he would get so much more for merch and event bonuses. Hunter's pay is released since he's an officer of the company and I think it was like $1.6 million in 2017. Cena would be upwards of several million in a year he works fairly regularly.
Reports of Roman Reigns being around $5 million (that would be his total pay, his downside guarantee would likely be much lower).
It goes right down to some of the female talent, especially non-regular, making less than $100,000. And remember, in WWE on the main roster you pay your own road expenses (hotel, car rental, food). NXT talent are treated more like employees and road expenses are paid. When you're called up they continue to do pay your road expenses for a period of time as you acclimate (and the big cheques start coming).
So if WWE offers someone a $3.5 million deal, the assumption is that's a downside guarantee and would be exceptionally large. And it would indicate WWE feels its a fraction of his value because you'd always make way more than your downside if you're working regularly. Obviously merchandise would be a big deal for Kenny. The higher up the card you are or the more responsible you are for a show's draw, the more bonus you get.
Everything is negotiable. And for veterans the big thing is negotiating less dates (so you're not constantly on the road).
Reportedly Brock gets $10 million a year and works limited dates. His contract allowed WWE to add dates if they wanted, but at an agreed upon price which was very high. Brock also gets the make his own sponsorship deals which is why he can wear corporate logos on his gear (no one else has that deal).
They would definitely want Kenny working house shows. Anyone can look at Kenny's schedule the last few years and see his doesnt work as often as he could (he would make a lot of money doing indy gigs but doesnt). So I could see him negotiating less than a full time schedule but he'd be big for house shows and WWE would want him on the house show circuit.
When AJ Styles went to WWE, Vince didnt see him as a star until the house show numbers with him suddenly shot up.
So yeah everything is negotiable. Kenny has endorsement deals and things he enjoys doing on the side. So he'd want to keep those because he enjoys them and they supplement his income. Its all negotiable. Even airplane status is negotiable with first class travel being a perk given to veterans when they reach a certain point.
WWE covers medical expenses and pays you your downside (and merch etc) when you're hurt.
For background, their developmental deals used to be really low, $500/week (I think that was Kenny's original WWE contract pay_. And everyone got that. I think it was $1000/week when NXT started and then they began giving "custom" deals to certain developmental talent they liked. I believe custom deals are more common in NXT now.
Back in the day, it was not uncommon for WWE to let certain talent work Japanese tours as well but that is a thing of the past.
For what it's worth, Meltzer has confirmed WWE made a "fantastic offer" to Kenny. He also said ROH, New Japan and All Elite are sitting down this weekend to discuss the future and potentially all working together.