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Share-Based Compensation | 6 Months Ended
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Dec. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-Based Compensation | 11. Share-Based Compensation During the three months ended September 30, 2017, we adopted the accounting standard update, or ASU, for Compensation-Stock Compensation which was issued by the Financial Accounting Standards Board, or FASB. This update simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Upon adoption of this ASU, we elected to change our accounting policy to account for forfeitures as they occur and we applied the accounting policy change on a modified retrospective basis. As a result of the adoption of this ASU, we recognized the net cumulative effect of this change as a $24.7 million increase to retained earnings, a $1.0 million increase to additional paid-in capital and established an additional $25.7 million of deferred tax assets for research credit and alternative minimum tax credit carryforwards. We have reflected excess tax benefits for share-based payments in the statement of cash flows as operating activities rather than financing activities on a prospective basis and therefore prior periods have not been adjusted. Share-based compensation and the related tax benefit recognized in our condensed consolidated statements of income were as follows (in millions):
|  | Three Months Ended |  |  | Six Months Ended |
|  | December 31, |  |  | December 31, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Cost of revenue |  | $ | 0.7 |  |  | $ | 0.6 |  |  | $ | 1.4 |  |  | $ | 1.1 |
Research and development |  |  | 9.8 |  |  |  | 8.5 |  |  |  | 18.9 |  |  |  | 16.3 |
Selling, general, and administrative |  |  | 7.3 |  |  |  | 6.5 |  |  |  | 14.0 |  |  |  | 12.8 |
Total |  | $ | 17.8 |  |  | $ | 15.6 |  |  | $ | 34.3 |  |  | $ | 30.2 |
Income tax benefit on share-based compensation |  | $ | (1.3 | ) |  | $ | 4.3 |  |  | $ | 2.7 |  |  | $ | 8.0 |
Historically, we have issued new shares in connection with our share-based compensation plans, however, treasury shares are also available for issuance. Any additional shares repurchased under our common stock repurchase program will be available for issuance under our share-based compensation plans. Stock Options Stock option activity, including stock options granted, exercised, and forfeited, 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 millions) |
Balance as of June 30, 2017 |  |  | 2,490,168 |  |  | $ | 49.20 |  |  |  |  |
Granted |  |  | 61,825 |  |  |  | 45.32 |  |  |  |  |
Exercised |  |  | (85,126 | ) |  |  | 27.85 |  |  |  |  |
Forfeited |  |  | (79,653 | ) |  |  | 67.02 |  |  |  |  |
Balance as of December 31, 2017 |  |  | 2,387,214 |  |  |  | 49.26 |  |  | $ | 14.0 |
Exercisable at December 31, 2017 |  |  | 1,943,715 |  |  |  | 46.64 |  |  | $ | 14.0 |
The aggregate intrinsic value was determined using the closing price of our common stock on December 29, 2017 of $39.94 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:
|  |  |  |  |  | Aggregate |
|  | DSU |  |  | Intrinsic |
|  | Awards |  |  | Value |
|  | Outstanding |  |  | (in millions) |
Balance as of June 30, 2017 |  |  | 1,320,798 |  |  |  |  |
Granted |  |  | 1,230,511 |  |  |  |  |
Delivered |  |  | (450,099 | ) |  |  |  |
Forfeited |  |  | (101,645 | ) |  |  |  |
Balance as of December 31, 2017 |  |  | 1,999,565 |  |  | $ | 79.9 |
The aggregate intrinsic value was determined using the closing price of our common stock on December 29, 2017 of $39.94. Of the shares delivered, 119,258 shares valued at $4.6 million were withheld to meet statutory tax withholding requirements. Market Stock Units Our Amended and Restated 2010 Incentive Compensation Plan provides for the grant of 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, and other management members, 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 S&P Semiconductor Select Industry Index, or SPSISC Index for grants beginning in fiscal 2018 and relative to the Philadelphia Semiconductor Index, or SOX Index for grants made prior to fiscal 2018. 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 SPSISC Index TSR or SOX Index TSR using the following formula: (100% + ([Synaptics TSR — {SPSISC Index TSR or SOX Index TSR}] x 2)) The payout for the first tranche and the second tranche will not exceed 100% and the payout for the third tranche will be calculated based on the total target quantity for the entire grant multiplied by the payout factor, based on performance for the three-year performance period, which will then be reduced by shares issued for the first tranche and the second tranche. 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 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, 2017, MSU activity, including MSUs granted, delivered, and forfeited, and the balance and aggregate intrinsic value of MSUs as of December 31, 2017 was as follows:
|  |  |  |  |  | Aggregate |
|  | MSU |  |  | Intrinsic |
|  | Awards |  |  | Value |
|  | Outstanding |  |  | (in millions) |
Balance as of June 30, 2017 |  |  | 158,596 |  |  |  |  |
Granted |  |  | 300,071 |  |  |  |  |
Performance adjustment |  |  | (68,003 | ) |  |  |  |
Delivered |  |  | - |  |  |  |  |
Forfeited |  |  | (8,733 | ) |  |  |  |
Balance as of December 31, 2017 |  |  | 381,931 |  |  | $ | 15.3 |
We value 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 $20.8 million as of December 31, 2017, which will be recognized over a weighted average period of approximately 1.6 years. Performance Stock Units Our Amended and Restated 2010 Incentive Compensation Plan provides for the grant of PSU awards to our employees, consultants, and directors. A PSU is a promise to deliver shares of our common stock at a future date based on the achievement of performance-based requirements in accordance with the terms of the PSU grant agreement. We have granted PSUs to our executive officers and other management members, which are designed to vest in three tranches with the target quantity for each tranche equal to one-third of the total PSU grant. The grants have a specific one-year performance period and vesting occurs over three service periods with the final service period ending approximately three years from the grant date. Performance is measured based on the achievement of a specified level of non-GAAP earnings per share. The potential payout ranges from 0% to 200% of the grant target quantity and is adjusted on a linear basis with a payout triggering if our non-GAAP earnings per share equals greater than 65% of the target with a maximum payout achieved at 135% of target. Delivery of shares earned, if any, will take place on the dates provided in the applicable PSU grant agreement, assuming the grantee is still an employee, consultant, or director of our company at the end of the applicable service period. On the delivery date, we withhold shares to cover statutory 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 PSU award. During the six months ended December 31, 2017, there were 300,071 PSUs granted and no PSUs were delivered or forfeited. The aggregate intrinsic value of PSUs as of December 31, 2017 was $12.0 million. We value PSUs using the aggregate intrinsic value on the date of grant and amortize the compensation expense over the three-year service period on a ratable basis, dependent upon the probability of meeting the performance measures. The unrecognized share-based compensation cost of our outstanding PSUs was approximately $11.0 million as of December 31, 2017, which will be recognized over a weighted average period of approximately 1.9 years. 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, 2017 were as follows (in millions, except for shares purchased and weighted average price):
Shares purchased |  |  | 210,798 |
Weighted average purchase price |  | $ | 32.17 |
Cash received |  | $ | 6.8 |
Aggregate intrinsic value |  | $ | 1.2 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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