On February 22, 2007, Verigy Ltd. issued a press release regarding Verigy’s financial results for its fiscal quarter ended January 31, 2007.  A copy of Verigy’s press release is attached hereto as Exhibit 99.1.

The Company includes in the press release certain non-GAAP financial measures, including non-GAAP net income.  As required by Regulation G, the press release contains a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures as well as a discussion of management’s uses of, and rationale for presenting, the non-GAAP financial measures.

The information contained in Item 2.02 of this Current Report and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02               Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) Compensatory Arrangements for Certain Officers

On February 15, 2007, Verigy’s Compensation Committee approved bonus metrics for executive officers for the first half of fiscal year 2007.  The Compensation Committee had previously approved target bonus levels for Verigy’s executives, expressed as a percent of base salary, and had further determined that the bonuses would be tied to three elements of performance: (1) company achievement of company-wide operating profit targets; (2) company achievement of other short-term financial goals; and (3) individual achievement of individual strategic goals.   Following the end of each performance period, the Compensation Committee determines the actual performance results for each performance measure and the amount of the bonus to which each plan participant is entitled.  If the relevant performance measures are not achieved, the plan participant may not receive any bonus or only a portion of the target bonus.  If the relevant performance measures are exceeded, the plan participant may receive a bonus in excess of the target bonus.

Item 8.01. Other Events.

Director Compensation

On February 15, 2007, the Compensation Committee determined that it would be appropriate to adjust the cycle upon which cash compensation is paid to the Company’s outside directors such that the cash compensation, like the automatic equity awards under Verigy’s 2006 Equity Incentive Plan, becomes payable following each year’s annual general meeting of shareholders.  As a result, the Compensation Committee adjusted the timing of payment of fees to non-employee directors such that such fees would become payable promptly following each year’s annual general meeting.  The overall level of non-employee director fees ($55,000 per year base plus committee chair supplements of $10,000 per year for each of the chairs of the audit committee and compensation committee and $5,000 per year for the chair of the nominating & governance committee) remains unchanged from prior levels.  In connection with the shift of payment cycle, the Compensation Committee approved a one-time pro rata payment of non-employee

director fees for the period from November 1, 2007 to April 15, 2008 (the estimated date of the Company’s 2008 annual general meeting) as follows: