9. Share-Based Compensation

Share-based compensation and the related tax benefit recognized in our condensed consolidated statements of income were as follows (in thousands):


	Three Months Ended September 30,
	2013		2012
Cost of revenue	$	254	$	243
Research and development		3,927		3,911
Selling, general, and administrative		2,861		4,313

Total	$	7,042	$	8,467

Income tax benefit on share-based compensation	$	1,972	$	2,218

Historically, we have issued new shares in connection with our share-based compensation plans; however, treasury shares were also available for issuance as of September 30, 2013, including shares repurchased under our common stock repurchase program.

Stock Options

Stock option activity, including stock options granted, exercised, and forfeited, and weighted average exercise prices for options outstanding and exercisable, and the aggregate intrinsic value were as follows:


	Stock Option Awards Outstanding			Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Balance at June 30, 2013		6,030,287		$	26.15
Granted		124,535			39.80
Exercised		(337,079	)		22.88
Forfeited		(27,327	)		30.90

Balance at September 30, 2013		5,790,416			26.61	$	97,903

Exercisable at September 30, 2013		4,431,991		$	25.49	$	79,895

The aggregate intrinsic value was determined using the closing price of our common stock on September 27, 2013 of $43.52, and excludes the impact of stock options that were not in-the-money.

Deferred Stock Units

DSU activity, including DSUs granted, delivered, and forfeited, and the balance and aggregate intrinsic value of DSUs were as follows:


	DSU Awards Outstanding			Aggregate Intrinsic Value (in thousands)
Balance at June 30, 2013		1,005,435
Granted		62,943
Delivered		(125,765	)
Forfeited		(26,734	)

Balance at September 30, 2013		915,879		$	39,859

The aggregate intrinsic value was determined using the closing price of our common stock on September 27, 2013 of $43.52.

Of the shares delivered, 42,094 shares valued at $1.7 million were withheld to meet statutory minimum tax withholding requirements.

Market Stock Units

Our Amended and Restated 2010 Incentive Compensation Plan provides for the grant of MSU awards, which are a type of DSU award, to our employees, consultants, and directors. An MSU is a promise to deliver shares of our common stock at a future date based on the achievement of market-based performance requirements in accordance with the terms of the MSU grant agreement. We began granting MSUs in November 2012.

In November 2012, we granted MSUs to our executive officers, which were designed to vest in three tranches with the target quantity for each tranche equal to one-third of the total MSU grant. The first tranche vests based on a one-year performance period; the second tranche vests based on a two-year performance period; and the third tranche vests based on a three-year performance period. Performance is measured based on the achievement of a specified level of total stockholder return, or TSR, relative to the TSR of the Philadelphia Semiconductor Index, or SOX Index. The potential payout ranges from 0% to 200% of the grant target quantity and is adjusted on a two-to-one ratio based on our TSR performance relative to the SOX Index TSR performance using the following formula:

(100% + ([Synaptics TSR - SOX Index TSR] x 2))

Delivery of shares earned, if any, will take place on the dates provided in the applicable MSU grant agreement, assuming the grantee is still an employee, consultant, or director of our company at the end of the applicable performance period. On the delivery date, we withhold shares to cover statutory minimum tax withholding by delivering a net quantity of shares. Until delivery of shares, the grantee has no rights as a stockholder with respect to any shares underlying the MSU award.

During the three months ended September 30, 2013, there were no MSUs granted and there were no shares under our MSU awards delivered or forfeited. We valued the MSUs using the Monte Carlo simulation model and amortize the compensation expense over the three-year performance and service period. The weighted average grant date fair value for the MSUs granted was $25.82. The unrecognized share-based compensation cost for MSUs granted was approximately $1.3 million as of September 30, 2013, which will be recognized over a weighted average period of approximately 1.0 years. As of September 30, 2013, the aggregate intrinsic value of the MSUs was $2.9 million (assuming a 100% payout factor), which was determined using the closing price of our common stock on September 27, 2013 of $43.52.