No need to penalize if the project fails. It's an incentive to encourage people to work on high impact projects. Especially important where people have some freedom over which teams they are on. Doing menial work that provides clear value to the company should be recognized and rewarded.

If you aren't responsible for the project's failure, you're not responsible for the project's success, and rewarding, or punishing, someone for what they aren't responsible for is irrational.