v3.26.1
Share-based payment arrangements
 12 Months Ended
Dec. 31, 2025
Share-based Payment Arrangements  
Share-based payment arrangements

11. Share-based payment arrangements

 

A.Description of share-based payment arrangements

 

As of December 31, 2025, the Company had the following share-based payment arrangements.

 

  i. Share option plan (cash-settled)

 

On June 30, 2021, Play F&B Co., Ltd, a subsidiary of Play Company, granted 400 share options to its employees. These options entitle the holders to a cash payment upon meeting the vesting conditions. The amount of the cash payment is determined based on the difference between the Company’s share price at the time of exercise and the exercise price.

 

The key terms and conditions related to the grants under these plans are as follows:

 

                   
Grant date   Number of instruments   Vesting conditions   Contractual life of options   Type   Underlying assets
Options granted to employees          
As of June 30, 2021   400   2 years’ service from grant date and the Play F&B Co., Ltd’s annual average Adjusted EBITDA (*1) equals or exceeds Korean Won 1,375,000 thousand at the date of exercise   7 years   Cash-settled   Play F&B Co., Ltd’s ordinary shares

 

 
(*1)Adjusted EBITDA = Operating Income +Depreciation of PP&E +Amortization of Intangible Assets +Advertising & marketing expenses

 

  ii. Equity Price Protection Right

 

On March 31, 2023, the Company entered into a Share Purchase Agreement with Hyeong Seok Cho (CEO of Play Company), which became effective on January 3, 2025. Under this agreement, Hyeong Seok Cho was granted a right to receive a cash payment based on the performance of KWM shares received as a compensation. The amount of the cash payment is determined based on the difference between the initial value and the actual selling price of the shares during the exercise period. In 2025, among 8,668,867 shares previously owned by Hyeong Seok Cho, 8,622,587 shares were disposed and related liabilities of Korean Won 25,738,891 thousand were calculated and classified as Trade and other non-current payables. The remaining 46,280 shares were measured at fair value using a binomial model (CRR), and related liabilities of Korean Won 145,431 thousand were calculated and classified as Trade and other non-current payables.

 

The key terms and conditions related to the grants under these plans are as follows:

 

                   
Grant date   Number of instruments   Vesting conditions   Contractual life of options   Type   Underlying assets
Options granted to employees          
As of January 3, 2025   N/A   Buyer compensates Seller for any shortfall if shares sold below initial value; adjusted for gains realized/distribute up to Dec 31, 2026   3 months following 6 month lock-up expiration   Cash-settled   KWM shares listed on Nasdaq

 

B.Measurement of fair values

 

  i. Cash-settled share-based payment arrangement

 

The fair value of the employee share options has been measured using a binomial model.

 

The inputs used in the measurement of the fair values at grant date and measurement date of the cash-settled share-based payment arrangement are as follows:

 

                   
Share appreciation rights (cash-settled)       December 31,
2025		     December 31,
2024		  
Fair value of option   ₩     7,540       54,230  
Share price         410,136       643,735  
Exercise price   ₩     1,100,000       1,100,000  
Risk- free interest rate (based on government bonds)         2.98 %     2.71 %
Volatility (*)         35.50 %     30.00 %

 

 
(*)Volatility has been based on an evaluation of the historical volatility of other companies’ share price, which are listed in KOSDAQ, particularly over the historical period commensurate with prior one year.

 

  ii. Equity Price Protection Right

 

The fair value of the employee share options related to remaining 46,280 shares owned by Hyeong Seok Cho has been measured using a binomial model(CRR).

 

The inputs used in the measurement of the fair values at grant date and measurement date of the cash-settled share-based payment arrangement are as follows:

 

                   
Share appreciation rights (cash-settled)       December 31,
2025		     December 31,
2024		  
Fair value of option   USD     2.19       -  
Share price   USD     0.41       -  
Exercise price   USD     2.6       -  
Risk- free interest rate (based on government bonds)         3.67 %     -  
Volatility (*)         53.5 %     -  

 

 
(*)Volatility has been based on an evaluation of the historical volatility of other companies’ share price, which are listed in NASDAQ, particularly over the historical period commensurate with prior one year.

 

C.Reconciliation of outstanding share options

 

The number and exercise prices of share options under the share option plan for the years ended December 31, 2025, 2024 and 2023 are as follows:

 

  i. Cash-settled share-based payment arrangement

 

                                                           
    2025     2024     2023  
    Number of options         Exercise price     Number of options         Exercise price     Number of options         Exercise price  
    (In Korean Won and number of options)  
Outstanding at January 1     400     ₩     1,100,000       400     ₩     1,100,000       400     ₩     1,100,000  
Outstanding at December 31     400           1,100,000       400           1,100,000       400           1,100,000  
Exercisable at December 31     -     ₩     -       -     ₩     -       -     ₩     -  

 

Details of the liabilities arising from the share option plan (cash-settled) are as follows.

 

                           
        As of
December 31,
2025		     As of
December 31,
2024		     As of
December 31,
2023		  
          (In thousands of Korean won)  
Total carrying amount of liabilities for share-based payment   ₩     25,887,338       21,692       201,819  
Total intrinsic value of liabilities for vested benefits         -       -       58,933