The question is specifically about the option grants.
Option grants are costed at the option value on the grant data, not stock value.
Option value is derived using models like Black-Scholes-Merton (MBS) - see derivatives topic.
Now the main point is; option value is positively correlated with the volatility; higher volatility = higher option value.
The company assumed volatility of 21.5% in 2024. The question is asking what will be the impact if it had used the volatility of 2023 which was 23% instead.
Volatility of 23% > volatility of 21.5%. This will lead to higher option value, thus higher option grant cost in income statement, and lower net income