Eso, I agree with you regarding the contract situation, and I don't think other reasonable people would disagree with you, assuming the terms of Lupe's contract with Atlantic approximate what you described.
But I think the misunderstanding derives from two conversations happening in this thread. While we agree about the current situation for Lupe, I don't know that it changes the relevance of the choice he had prior to signing.
Of course, context is key. As I recall, Lupe had a great buzz before signing with Atlantic. If one believes he could have parlayed that popularity into success independently, I imagine there would be little disagreement that he should have avoided a major. Of course, there's no guarantee that a few years ago, he could have taken that popularity as Drake did (or Wiz Khalifa currently has) and make himself into a big name off his own work without signing to a label, or even that he had the business acumen to do so. Thus, a major may have effectively been his only choice to make his music and get any sort of popular distribution, and I wouldn't begrudge him for that decision.
Of coures, I like to think artists are more entrepreneurial than that. I'd like to think they have the ability do much of what they want on their own because they have the desire and drive to do so, and can survive without a major, if the conditions are right. I think, with Lupe's popularity before signing, he could have struck out on his own. But I imagine that is an overly rosy picture of the music industry, certainly of the time when Lupe signed.
As a note, I don't presume to understand anything about the music industry more than anyone on this forum who has direct experience with the industry. I'm just applying what seems most logical, given the information that I have or seems reasonable to assume. Thus, if any assertion I make appears to be based on an assumption that is wrong, please let me know!