Do executives demand a premium for working in polluted environments? We model, hypothe-size and show that they do. This is the case even if we exclude polluting firms. We mitigate causality and identification concerns by (inter alia) using a quasi-natural experiment: the acid rain project. The impact of pollution increases with managerial bargaining power, as captured through CEO power, managerial ability, and outside opportunities. The latter being captured with the staggered passage of the inevitable disclosure doctrine. Environmental consciousness in the media also increases this effect. These findings are consistent with policy, investor, and corporate goals of mitigating environmental damage.

JEL Classification Code: M12,M52, G34, I10

Keyword: CEO Compensation, Corporate Headquarter Location, Air Pollution​