Sentence Correction

Since 1986 when the Department of Labor began to allow investment officers' fees to be based on how the funds they manage perform, several corporations began paying their investment advisers a small basic fee, with a contract promising higher fees if the managers perform well.
(A) investment officers' fees to be based on how the funds they manage perform, several corporations began
(B) investment officers' fees to be based on the performance of the funds they manage, several corporations began
(C) that fees of investment officers be based on how the funds they manage perform, several corporations have begun
(D) fees of investment officers to be based on the performance of the funds they manage, several corporations have begun
(E) that investment officers' fees be based on the performance of the funds they manage, several corporations began

how to determine if..

..HAVE BEGUN is needed or BEGAN ???

the use of "since" is an indicator of present perfect tense, so we must use "have begun"-present perfect.

Stuck between C and D..Why is D better?

The present perfect "have begun" is appropriate here, as scoobydooby pointed out. That narrows the options down to C and D. C can be eliminated because "allow that" isn't the correct idiom; it should be "allow x to y," not "allow that x y," in this context at least. It's possible that "allow that x y" would be correct in some other context, but I can't think of one.

C is wrong.

1. they Manage perform ?

It does don't make sense to me.

Optimus Prime wrote:Stuck between C and D..Why is D better?

C looks awkward. D is precise.

Since 1986 when the Department of Labor began to allow investment officers' fees to be based on how the funds
they manage
perform,
several corporations began paying their investment advisers a small basic fee, with a contract promising higher fees
if the managers perform well.

Highlighted are the subject verb pairs for clauses. Now let's move to POE.

(A) investment officers' fees to be based on how the funds they manage perform, several corporations began - On is a preposition. Prep are always followed by noun. However this is followed by clause. They has no referent because investment officer is in possessive and hence act as an adjective to the noun fees but pronouns can only modify noun/noun pharse or other pronouns. Due to the usage of since we need present perfect showing continuity since 1986.
(B) investment officers' fees to be based on the performance of the funds they manage, several corporations began - Modifier error and verb error as in A
(C) that fees of investment officers be based on how the funds they manage perform, several corporations have begun - Prepositional object creates structural error.
(D) fees of investment officers to be based on the performance of the funds they manage, several corporations have begun - Correct
(E) that investment officers' fees be based on the performance of the funds they manage, several corporations began - Mod and verb error as in A

Since 1986 when the Department of Labor began to allow investment officers' fees to be based on how the funds they manage perform, several corporations began paying their investment advisers a small basic fee, with a contract promising higher fees if the managers perform well.

tested :
->Idiom - "allow to" is correct and "allow that" is incorrect
->they has no clear referent because it should logically refer to officers but grammatically it is referring to fees
"allow investment officers' fees" - ONLY POSSESSIVE pronouns can refer POSSESSIVE Nouns"
->SINCE : will take "have" verb because "from 1986 till present" from past to present

(A) investment officers' fees to be based on how the funds they manage perform, several corporations began
(B) investment officers' fees to be based on the performance of the funds they manage, several corporations began
(C) that fees of investment officers be based on how the funds they manage perform, several corporations have begun
(D) fees of investment officers to be based on the performance of the funds they manage, several corporations have begun - correct
(E) that investment officers' fees be based on the performance of the funds they manage, several corporations began