On Wednesday, it announced that the independent directors of the board unanimously elected the Indian-origin Nadella.
According to The Verge, it is the first time in two decades that Microsoft's chairman will also be its CEO, after the software giant's co-founder Bill Gates originally stepped down as CEO in 2000.
Also, Thompson, who took over as chairman from Bill Gates in 2014, will serve as lead independent director.
Nadella was appointed Microsoft CEO in 2014 after taking over the position from Steve Ballmer.
The recent change comes after Bill Gates officially left the Microsoft board entirely in 2020.
