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

OA is d but I like c. Please explain

Try to pull out the core of the sentence; this can make it easier to see what is right with D and wrong with C.

C:
DOL began to allow that fees be based on how...

D: DOL began to allow fees to be based on performance...

C is using the subjunctive construction intended for use in one type of situation: the desire of a person or entity for another person or entity to do something. That is not the intention of this sentence - it is not a desire on the part of DOL that officers be allowed to do something. Rather, DOL allowed the officers to do something.

Your explanation makes perfect sense. Thanks.

you're welcome!