It's not just Yahoo. Companies that think of engineers as anything but replaceable "resources" are very much an exception to the norm.

An engineer is the last person I'd want running a company like Yahoo! (and for many reasons). Hired-gun CEO's are expensive and don't always work, but the odds of success must be greater then hoping your brilliant founder/engineer works out as an executive. I would argue it's easier to educate an old CEO on tech than it is to teach an engineer how to be a successful exec.

See Slide, Yelp, Facebook...

"Engineers would count for more than MBA's" - i never said that an Engineer/Founder should be the CEO.

However, in a Tech company the contribution and therefore compensation of an Engineer would be expected to be higher than that of an MBA.

It depends. Ben horowitz wrote a blog post recently on why they prefer founding CEOs :

http://bhorowitz.com/2010/04/28/why-we-prefer-founding-ceos/

except Yahoo is not tech but media company

I don't disagree, but they have some smart and fun hackers at yahoo.

They used to. Yahoo! used to be a great company for an engineer to work for. Given what they have been doing lately, it seems the focus has changed from being a tech company to a media company. In fact, it all probably changed when Terry was brought in to run the company and he wanted to focus on digital media.

There's a lot of small intangible things that go in to making a huge successful company. The core employees "wanting" to work at the company (as compared to just collecting a paycheck) is one of the most imporant ones.