12. 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				Six Months Ended
	December 31,				December 31,
	2014		2013		2014		2013
Cost of revenue	$	336	$	262	$	638	$	516
Research and development		5,950		4,241		11,350		8,168
Selling, general, and administrative		4,442		3,119		8,235		5,980

Total	$	10,728	$	7,622	$	20,223	$	14,664

Income tax benefit on share-based compensation	$	3,045	$	2,834	$	5,731	$	4,806

Historically, we have issued new shares in connection with our share-based compensation plans, however, treasury shares were also available for issuance as of December 31, 2014. Any additional shares repurchased under our common stock repurchase program would be available for issuance under our share-based compensation plans.

Stock Options

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


	Stock			Weighted		Aggregate
	Option			Average		Intrinsic
	Awards			Exercise		Value
	Outstanding			Price		(in thousands)
Balance at June 30, 2014		3,693,375		$	30.08
Granted		261,991			68.87
Exercised		(375,730	)		29.21
Forfeited		(25,363	)		39.82

Balance at December 31, 2014		3,554,273			32.96	$	138,860

Exercisable at December 31, 2014		2,568,671			26.77	$	115,729

The aggregate intrinsic value was determined using the closing price of our common stock on December 26, 2014 of $71.80 and excludes the impact of stock options that were not in-the-money.

Deferred Stock Units

Deferred Stock Units, or DSU, activity, including DSUs granted, delivered, and forfeited, and the balance and aggregate intrinsic value of DSUs was as follows:


	DSU Awards			Aggregate Intrinsic Value
	Outstanding			(in thousands)
Balance at June 30, 2014		1,058,243
Granted		312,293
Delivered		(264,784	)
Forfeited		(39,829	)

Balance at December 31, 2014		1,065,923		$	76,533

The aggregate intrinsic value was determined using the closing price of our common stock on December 26, 2014 of $71.80.

Of the shares delivered, 74,568 shares valued at $5.2 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 Market Stock Unit, or MSU awards, 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 have granted MSUs to our executive officers, which are 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))

Beginning with the MSU grants in fiscal 2015, the payout for tranche one and two will not exceed 100% and the payout for tranche three will be calculated based on the total target quantity for the entire grant multiplied by the payout factor, which will then be reduced by tranche one and tranche two stock issuances.

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 requirements and deliver a net quantity of shares to the employee, consultant, or director after such withholding. Until delivery of shares, the grantee has no rights as a stockholder with respect to any shares underlying the MSU award.

During the six months ended December 31, 2014, MSU activity, including MSUs granted, delivered, and forfeited, and the balance and aggregate intrinsic value of MSUs as of December 31, 2014 was as follows:


	MSU Awards		Aggregate Intrinsic Value
	Outstanding		(in thousands)
Balance at June 30, 2014		120,330
Granted		70,300
Performance adjustment		46,712
Delivered		(93,424)
Forfeited		—

Balance at December 31, 2014		143,918	$	10,333

We value the MSUs using the Monte Carlo simulation model on the date of grant and amortize the compensation expense over the three-year performance and service period on a straight-line basis. The unrecognized share-based compensation cost of our outstanding MSUs was approximately $7.7 million as of December 31, 2014, which will be recognized over a weighted average period of approximately 1.44 years. The aggregate intrinsic value was determined using the closing price of our common stock on December 26, 2014 of $71.80.

Of the shares delivered, 47,883 shares valued at $3.0 million were withheld to meet statutory minimum tax withholding requirements.

Employee Stock Purchase Plan

Shares purchased, weighted average purchase price, cash received, and the aggregate intrinsic value for employee stock purchase plan purchases during the six-month period ended December 31, 2014 were as follows (in thousands, except for shares purchased and weighted average price):


Shares purchased		230,241
Weighted average purchase price	$	25.46
Cash received	$	5,862
Aggregate intrinsic value	$	8,390