It does sound fair, the engineer also gets paid $200k if the product ends up going nowhere, so he doesn't bear the risk. The company also provides lots of things to enable that "20M" to be generated that the engineer doesn't provide, such as sales, distribution, etc etc etc etc.

Lots of things are "necessary but not sufficient" for the company to make the $20M.

For example they wouldn't have made any money without electricity, should the power company get paid more just because of what someone did with their electricity?

Rarely does a company make 20M off the work of one engineer. Every 4-5 engineers is another 1M expense, nevermind the other employee salaries. I get kind of annoyed when people look at large aggregate numbers and complain about how different they are from the individual employee pay. Even CEO pay - if they took the entire bonus given to the General Motors CEO and divided it among every employee in the company, it would come out to something smaller than their Christmas bonus. I do think CEOs are generally overpaid and under-liable, but it's not like the CEO salary is directly responsible for workers missing out on the highlife.

On the other hand, sometimes the engineer gets paid $200k while the company makes -$20M.