There exception are people who are trapped there (H1B, a massive side project, sick family member, whatever), or are vesting out after M&A. Come back to this in 0.5 to 3.5 years when the Tumblr team have filled their vesting.
(You can make a reasonable case that big companies are better at EoE than startups, but I don't see a strong case that Yahoo! is better than Apple or Google or ...)
This is because the culture at Yahoo! has been horrible in terms of actually turning technology into products, or at any real innovation. A succession of utterly incompetent CEOs and ossified and incompetent upper management pretty much killed the company, technically.
Every Yahoo! I've talked to said it was a "nice" place to work if you're just collecting a paycheck. It was a horrible place to actually try to do anything meaningful (with a few exceptions, like Panama, and even then). So, it depends on your goals with a job: a paycheck ,or a chance to change the world. It's up to the individual which it is.
However, people who are neither competent nor ambitious are irrelevant in general, and those who aren't both are largely irrelevant in creating anything new. (I know many highly-competent but situationally-lazy people who remained at Yahoo! a bit longer than was good for them. They had impressive personal projects during that time. They were vastly happier when they moved on to other companies.)
(As an indicator: outside of Government, Yahoo! had more contractors in more key roles than anywhere else I've ever seen. Microsoft had a lot of contractors, too, but they were generally not in core roles, and after that court case, were only there for ~a year.)
So, I stand by my original comment.
My opinion is that you're now debating a completely different set of points.First you only told us that no one talented works there, and I think we both know that's just wrong. That you haven't brought it up again indicates that you concede this point. Correct me if I'm wrong.
Look. This is not to say that everything you've said is completely wrong. A lot of what you say is true. But I do think your case is pretty overstated, especially since these things depend pretty dramatically on which team your on. The disparity between a good Yahoo team and a good Google team is miniscule, even though the difference between a good Yahoo team and a bad Yahoo team is really high.
Beyond the fact that I don't think you understand the reasons why people would stay at a company like Yahoo, I don't think you actually know much about the people who work there. Yahoo owns Tumblr, which still employs some of the best engineers I've ever met. More than 20% of the hires the first year after the Mayer takeover were boomerangs, which is a good indication that your implication that between 2009 and now Yahoo suddenly lost every talented non-immigrant employee is just wrong. And so on.
I'm not saying this to pick on you or just to be critical for its own sake. I'm sure you're a nice person. But this comment was just painful to read. Please think carefully about this sort of thing before you say something else like it.
EDIT: Ah, HN. Where telling someone that a company with 10,000 employees probably does in fact have a few talented engineers earns you anonymous down votes. :(