From what I understand, professors' salaries normally do not depend on handing out PhDs at all. At least, not once they have tenure.
You need to have students to have grants. But the reason you gets grants is to pay your students. So, anticipating that this issue may come up, I don't think that's it, either.
Actually, there is a set of incentives for professors to hand out PhDs. Before tenure, professors have to successfully graduate PhD students (or at least get most of the way there), otherwise questions will be raised in tenure review. After tenure, failure to graduate students equates to failure to attract new ones, loss of prestige, loss of connectivity to their academic network by way of a graduated student, etc.
You need to have students to help you in your research, and you won't have students if you have a reputation for never ever awarding a PhD. It's a give-and-take relationship.
You need to have students to have grants. But the reason you gets grants is to pay your students. So, anticipating that this issue may come up, I don't think that's it, either.