I say choose Option 3. Understand him
I know this come way out of left field but I believe in understanding why people are the way they are over you're dead to me!
The quick and dirty way to understand him is to read his natal chart.
Go to http://astro.cafeastrology.com and read up.
You'll find some fascinating insights and you'll be able to pinpoint his problem with working with others.
For example he might have his Saturn in Leo which would mean: Weaknesses: abuse of power, little feeling in the workplace.
So once you find out all this info you can have your team read his birth chart and you'll know what to expect.
Astrology might seem like it's bullshit but it's not, I've heavily tested it and it's super real. Check out https://cafeastrology.com/articles/signcompatiblitygrid.html which will show you the basics of how we get along with folks we aren't compatible with. This compatibility runs through friends, family, loved ones and lovers.
With understanding of him you'll be able to ignore his wild mood swings and why he looks down on people and is so insecure.
The key to reading his birth chart effectively is using your own experience of people in your life who are Sagittariuses for example.
Some interesting parts of his birth chart you'll want to look at include:
* His Sun Sign: This is what we all know about astrology but is not that helpful without all the underlying detail
* His Moon Sign: Your moon sign controls your emotions. Most likely his Moon and Sun sign are battling each other and his moon sign is more dominate than his Sun causing some of the instability you've mentioned.
* His Mercury is how he communicates. If he has a fire sign here or it's in a strong sign like Leo or Scorpio that would explain why he's a jerk
* His Rising Sign: This is how the outside world views him I've found people whose rising signs are in Aquarius (Contrarians) put people off.
Balance
Astrology is very unique because you can use their birth chart to find out if they're in or out of balance.
For example let's say you meet a Scorpio and they're being super cautious, that's because they're out of balance and behaving like their opposite sign which is Taurus (Known for being very practical and patient). Naturally Scorpios are risking and extreme). You can use the compatibility grid to find out his opposites and see if he's just being himself or out of balance.
Finally have everyone at work read their own astrology and compare it with his, you'll learn a lot about yourselves and you might find that clashes are happening because of similarities not incompatibilities.
P.S. Have you asked about issue with ladies or his spouse? That could really be the issue.