Don't cry for me, you contented

Rhythms NetConnections

(RTHM)

shareholders.

CEO Catherine Hapka this week quit just a day after the company's annual report revealed that

she got a 10% pay raise for leading the digital subscriber line service provider to the brink of bankruptcy. Hapka's salary isn't the only thing likely to stick in shareholders' craw, though: Regulatory filings reveal that Hapka made a pretty penny by exercising options to buy Rhythms shares as the stock plunged amid the last year's

Nasdaq

bloodletting, and that by sticking around through the end of this month she'll net more than $40,000 by reaping part of her "retention bonus."

Rhythms shares once traded above $30 as investors bet that providing fast Net access would become a surefire money-maker. But DSL providers were among the dozens of small telcos that fell out of favor with investors as it became clear that competing with the Baby Bells made for an

unsustainably expensive proposition. Rhythms stock now changes hands for around a quarter, leaving the shares 99% below the year-ago level.

Nevertheless, as shareholders lost millions, Hapka managed to reap $10.5 million by selling Rhythms stock before the worst of the plunge. Hapka sold her shares, which she received largely through options grants, over the spring and summer when the stock price was still above $10. She still holds 2.7 million shares, or 3.4% of the company, making her the second-largest individual stakeholder. A Rhythms spokeswoman said Hapka wouldn't be available for interviews in the near future.

Hapka also made $810,000 last year in salary and bonuses, and was bumped up to a $400,000 base salary this year, with a guaranteed 70% bonus. Hapka's contract also guaranteed that she would receive her annual salary in a lump sum if she was ever fired.

Steve Stringer, the company's chief operating officer, will take Hapka's job after she departs May 1. Stringer's salary and bonus last year amounted to $627,529, and he holds 1.67 million Rhythms shares. Stringer didn't sell any company shares last year, according to

Securities and Exchange Commission

documents.

In a statement released Tuesday, Rhythms director Kevin Compton said: "On behalf of the board, we want to thank Catherine Hapka for her service to the company."

Certainly shareholders may not be quite as thankful.