We use the density functional theory and lattice dynamics calculations to investigate the properties of potassium superoxide KO$_2$ in which spin, orbital, and lattice degrees of freedom are interrelated and determine the low-temperature phase. After calculating phonon dispersion relations in the high-temperature tetragonal $I4/mmm$ structure, we identify a soft phonon mode leading to the monoclinic $C2/c$ symmetry and optimize the crystal geometry resulting from this mode. Thus we reveal a displacive character of the structural transition with the group-subgroup relation between the tetragonal and monoclinic phases. We compare the electronic structure of KO$_2$ with antiferromagnetic spin order in the tetragonal and monoclinic phases. We emphasize that realistic treatment of the electronic structure requires including the local Coulomb interaction $U$ in the valence orbitals of the O$^-_2$ ions. The presence of the `Hubbard $U$ leads to the gap opening at the Fermi energy in the tetragonal structure without orbital order but with weak spin-orbit interaction. We remark that the gap opening in the tetragonal phase could also be obtained when the orbital order is initiated in the calculations with a realistic value of $U$. Finally, we show that the local Coulomb interactions and the finite lattice distortion, which together lead to the orbital order via the Jahn-Teller effect, are responsible for the enhanced insulating gap in the monoclinic structure.
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