It is company theft and it is unethical. Not sure how long he has been doing this. Warning/write up is needed and a talk face to face. Change hours to 8-3 is a good idea. Does he go off the property while still on the clock?

As hard as it will be have the talk about the hours. Make sure to document this discussion. Then set up maintenance things to do after 3pm, that take about a hour.
If you are his direct supervisor you must have the performance talks.

I would sit down and have a transparent conversation with him. Acknowledge where you see his value, but be candid about the expectations that he is not meeting and that it's resulted in a break down of trust. The hard conversations are the worst, so I wish you nothing but the best. Always check in with HR and see if they have a suggested or required protcol. In whatever way that you address, make sure it's documented as a verbal or written warning/conversation. 

Work until 4:00 pm one day and catch him :-)

If he is good at his job, give him a final warning and change his hours to your. However, that being said, if he is stealing hours he may be stealing elsewhere.

Stealing requires no warning I feel.