The 23-year-old defenseman, who was a restricted free agent, had NHL career highs in goals (six), assists (23), points (29) and average ice time (20:21 per game) in 61 games last season.
"I don't know that we were ever really far apart. It was more, what's the right term?" Golden Knights general manager George McPhee said. "They were more interested in going shorter, we were more interested going longer. When it was laid out and explained to the player why we were doing that, it helps us manage the NHL salary] cap better. And if we're doing that better, I think the chances of us winning are better.
"You can look at the cap in certain ways, and we have a lot of space this year and probably next year. We'd like to use it to help us in the future, use more of it now. We thought if we paid a little more now and we had a contract that was pretty steady throughout its term and we have cost certainty in the future, it allows us to manage the cap better and plan better as a result for what we want to do for the next couple of years. He's a good young player and we got some unrestricted years, and now he can just play."
Acquired at the 2017 NHL Expansion Draft from the Anaheim Ducks for selecting defenseman
[Clayton Stoner
, Theodore had 10 points (three goals, seven assists) in 20 Stanley Cup Playoff games, helping the Golden Knights reach the Stanley Cup Final, which they lost to the Washington Capitals in five games.
"We were pretty confident based on the way he played last year and what he did at his age last year, to really play that well and play that well in the playoffs," McPhee said. "We were confident of what we were going to have now and in the future."
Anaheim selected Theodore in the first round (No. 26) of the 2013 NHL Draft. He has 46 points (11 goals, 35 assists) in 114 NHL games with the Golden Knights and Ducks, and 18 points (five goals, 13 assists) in 40 playoff games.
NHL.com correspondent Danny Webster contributed to this report
